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Cit Group Inc (CIT) SEC Filing 10-Q Quarterly report for the period ending Tuesday, March 31, 2020

Cit Group Inc

CIK: 1171825 Ticker: CIT

 

 

 

Exhibit 99.1

 

 

 

CIT Announces First Quarter 2020 Results                

NEW YORK – April 21, 2020 –

CIT Group Inc. (NYSE: CIT) today reported first quarter 2020 financial results.

Financial Results

Our financial results and trends in the first quarter 2020 reflect three key events during the quarter:

The global pandemic from the spread of the COVID-19 virus and the ensuing adverse impact on the macroeconomic environment.

The adoption of the Current Expected Credit Losses (CECL) standard, which requires the estimation of credit losses over the full remaining expected life of the portfolio, rather than the incurred loss model.

The acquisition of Mutual of Omaha Bank (MOB) on January 1, 2020, which impacts the comparability of current quarter results to prior periods.

Because the CECL standard introduces economic forecasting into the allowance setting process, the macroeconomic impact of the global pandemic significantly increased our first quarter provision for credit losses.

In addition, the deterioration of the macroeconomic environment triggered a goodwill impairment assessment that resulted in an impairment in the current quarter.

First quarter loss to common shareholders of $628 million or $6.40 per diluted common share.

Excluding noteworthy items, first quarter loss to common shareholders of $238 million or $2.43 per diluted common share1, reflecting a $469 million provision for credit losses, of which $405 million ($3.38 per diluted common share) relates to the forecasted macroeconomic environment.

Chairwoman and CEO Commentary

“After several years of transformation, CIT entered 2020 as a stronger company. These unprecedented times have tested and confirmed that we have the resources, expertise and rigor to respond to the challenges related to COVID-19,” said CIT Chairwoman and Chief Executive Officer Ellen R. Alemany. “Our first response to the pandemic was to ensure the continuity of our operations, support for our employees and assistance for our customers and communities. Additionally, we remain focused on ensuring our capital and liquidity positions remain solid and our funding profile strong.”

Alemany continued, “While our first quarter results were affected by the current economic environment, I’m proud of the agility and resilience of the CIT team. We will continue to operate steadily through this dynamic environment and to meet the evolving needs of our customers with the breadth of our experience and dedication.”

Strategic Pillars

Grow Core Businesses

Average loans and leases up 18% from prior quarter, primarily reflecting the MOB acquisition.

Excluding MOB, 1% growth in average core loans and leases2 from the prior quarter.

Optimize Balance Sheet

Average outstanding deposit costs decreased 34 bps compared to the prior quarter, including a 21 bps benefit from the addition of lower-cost MOB deposits.

Loans and leases-to-deposits ratio at CIT Bank up slightly to 95% at March 31, 2020.

Enhance Operating Efficiency

Continue to target $50 million in net operating expense reductions for 2021.

Integration of MOB remains on track.

Maintain Strong Risk Management

Capital levels well in excess of CCB3 (CET1 ratio of 9.7%) and strong liquid asset levels ($9.5 billion in available cash and HQLA securities4) at March 31, 2020.

Proactive portfolio management.

Selected Financial Highlights:

 

 

Select Financial Highlights*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1Q20 change from

 

($ in millions)

1Q20

 

 

4Q19

 

 

1Q19

 

 

4Q19

 

 

1Q19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net finance revenue(1)

$

366

 

 

$

350

 

 

$

369

 

 

$

16

 

 

5

%

 

$

(4

)

 

-1

%

Non-interest income

 

131

 

 

 

111

 

 

 

97

 

 

 

19

 

 

17

%

 

 

34

 

 

35

%

Total net revenue(1)

 

496

 

 

 

461

 

 

 

466

 

 

 

35

 

 

8

%

 

 

30

 

 

6

%

Goodwill impairment

 

345

 

 

 

-

 

 

 

-

 

 

 

345

 

NM

 

 

 

345

 

NM

 

Operating expenses and loss on debt extinguishment

 

334

 

 

 

259

 

 

 

276

 

 

 

76

 

 

29

%

 

 

58

 

 

21

%

(Loss) income from continuing operations before credit provision

 

(183

)

 

 

203

 

 

 

190

 

 

 

(385

)

NM

 

 

 

(373

)

NM

 

Provision for credit losses

 

514

 

 

 

23

 

 

 

33

 

 

 

491

 

NM

 

 

 

481

 

NM

 

(Loss) income from continuing operations before (benefit) provision for income taxes

 

(697

)

 

 

180

 

 

 

157

 

 

 

(877

)

NM

 

 

 

(854

)

NM

 

(Benefit) provision for income taxes

 

(72

)

 

 

49

 

 

 

38

 

 

 

(122

)

NM

 

 

 

(110

)

NM

 

(Loss) income from continuing operations

 

(624

)

 

 

131

 

 

 

119

 

 

 

(755

)

NM

 

 

 

(744

)

NM

 

Income from discontinued operations, net of taxes

 

-

 

 

 

-

 

 

 

(0

)

 

 

-

 

NM

 

 

 

-

 

 

-

 

Net (loss) income

 

(624

)

 

 

131

 

 

 

119

 

 

 

(755

)

NM

 

 

 

(743

)

NM

 

Preferred stock dividends

 

4

 

 

 

10

 

 

 

-

 

 

 

(6

)

 

-60

%

 

 

4

 

NM

 

Net (loss) income available to common shareholders

$

(628

)

 

$

121

 

 

$

119

 

 

$

(749

)

NM

 

 

$

(747

)

NM

 

(Loss) income from continuing operations available to common shareholders

$

(628

)

 

$

121

 

 

$

119

 

 

$

(749

)

NM

 

 

$

(747

)

NM

 

Noteworthy items(2)

 

390

 

 

 

-

 

 

 

-

 

 

 

390

 

 

 

 

 

 

390

 

 

 

 

(Loss) income from continuing operations available to common shareholders, excluding noteworthy items¹⁾⁽²

$

(238

)

 

$

121

 

 

$

119

 

 

$

(360

)

NM

 

 

$

(358

)

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted (loss) income per common share

$

(6.40

)

 

$

1.27

 

 

$

1.18

 

 

$

(7.68

)

NM

 

 

$

(7.58

)

NM

 

Diluted (loss) income per common share, excluding noteworthy items

$

(2.43

)

 

$

1.27

 

 

$

1.18

 

 

$

(3.70

)

NM

 

 

$

(3.61

)

NM

 

Average diluted common shares outstanding (in thousands)

 

98,089

 

 

 

95,143

 

 

 

101,096

 

 

 

2,946

 

 

3

%

 

 

(3,007

)

 

-3

%

Tangible book value per common share (TBVPS)(1)

$

51.12

 

 

$

56.77

 

 

$

52.42

 

 

$

(5.64

)

 

-10

%

 

$

(1.29

)

 

-2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average loans and leases (includes HFS and net of credit balances)

$

43,910

 

 

$

37,241

 

 

$

36,360

 

 

$

6,669

 

 

18

%

 

$

7,549

 

 

21

%

Average core loans and leases (includes HFS and net of credit balances)

 

41,754

 

 

 

35,081

 

 

 

33,602

 

 

 

6,673

 

 

19

%

 

 

8,152

 

 

24

%

Average earning assets (AEA)(1)

 

53,685

 

 

 

46,504

 

 

 

46,169

 

 

 

7,181

 

 

15

%

 

 

7,515

 

 

16

%

New business volume

 

3,592

 

 

 

3,619

 

 

 

2,684

 

 

 

(27

)

 

-1

%

 

 

908

 

 

34

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Key performance metrics, continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net finance margin(1)

 

2.73

%

 

 

3.01

%

 

 

3.20

%

 

-28bps

 

 

 

 

 

-47bps

 

 

 

 

Net efficiency ratio(1)

 

65.6

%

 

 

54.8

%

 

 

58.0

%

 

NM

 

 

 

 

 

NM

 

 

 

 

Net charge-offs

 

0.57

%

 

 

0.40

%

 

 

0.43

%

 

17bps

 

 

 

 

 

14bps

 

 

 

 

Return on AEA (ROAEA)(1)

NM

 

 

 

1.04

%

 

 

1.03

%

 

NM

 

 

 

 

 

NM

 

 

 

 

Return on tangible common equity (ROTCE)(1)

NM

 

 

 

9.41

%

 

 

9.67

%

 

NM

 

 

 

 

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Key performance metrics, continuing operations excluding Noteworthy Items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net finance margin(1)(2)

 

2.73

%

 

 

3.01

%

 

 

3.20

%

 

-28bps

 

 

 

 

 

-47bps

 

 

 

 

Net efficiency ratio(1)(2)

 

62.2

%

 

 

54.8

%

 

 

58.0

%

 

NM

 

 

 

 

 

NM

 

 

 

 

Net charge-offs

 

0.57

%

 

 

0.40

%

 

 

0.43

%

 

17bps

 

 

 

 

 

14bps

 

 

 

 

ROAEA(1)(2)

NM

 

 

 

1.04

%

 

 

1.03

%

 

NM

 

 

 

 

 

NM

 

 

 

 

ROTCE(1)(2)

NM

 

 

 

9.41

%

 

 

9.67

%

 

NM

 

 

 

 

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Net finance revenue, total net revenue, TBVPS, AEA, net finance margin, net efficiency ratio, ROAEA and ROTCE are non-GAAP measures that management uses to evaluate the performance of the business. See "Non-GAAP Measurements" at the end of this press release for a reconciliation of non-GAAP to GAAP financial information, descriptions of the non-GAAP measures, and noteworthy items. TBVPS is detailed on page 16.

 

(2)We exclude noteworthy items due to their episodic nature and size. See "Non-GAAP Measurements" at the end of this press release for a reconciliation of non-GAAP to GAAP financial information and noteworthy items.

 

*Certain balances may not sum due to rounding.

 

 

1 

Loss to common shareholders excluding noteworthy items is a non-GAAP measure. See “Non-GAAP Measurements” at the end of this press release for a reconciliation of non-GAAP to GAAP financial information.

2 

Average core loans and leases excluding the MOB acquisition is a non-GAAP measure. Core portfolios excluding the MOB acquisition are total loans and leases net of credit balances of factoring clients, Legacy Consumer Mortgages (LCM), Non-Strategic Portfolios (NSP) and the loans added in the MOB acquisition. See “Non-GAAP Measurements” at the end of this press release for a reconciliation of non-GAAP to GAAP financial information.

3 

Capital conservation buffer.

4 

Available cash consists primarily of unrestricted cash held at the Fed or correspondent banks. High Quality Liquid Assets (HQLA) consist of readily marketable and unencumbered Treasury and Agency securities at market value held outright or via reverse repurchase agreements.

 

 

1

 


The following information was filed by Cit Group Inc (CIT) on Tuesday, April 21, 2020 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Document And Entity Information
Condensed Consolidated Balance Sheets (Unaudited)
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical)
Condensed Consolidated Statements Of Cash Flows (Unaudited)
Condensed Consolidated Statements Of Cash Flows (Unaudited) (Parenthetical)
Condensed Consolidated Statements Of Comprehensive Income (Unaudited)
Condensed Consolidated Statements Of Income (Unaudited)
Condensed Consolidated Statements Of Stockholders' Equity (Unaudited)
Condensed Consolidated Statements Of Stockholders' Equity (Unaudited) (Parenthetical)
Acquisition And Discontinued Operations
Acquisition And Discontinued Operations (Consideration And Net Assets Acquired) (Details)
Acquisition And Discontinued Operations (Narrative) (Details)
Acquisition And Discontinued Operations (Selected Unaudited Pro Forma Financial Information) (Details)
Acquisition And Discontinued Operations (Summary Of Intangible Assets Recorded In Conjunction With Mob Transaction ) (Details)
Acquisition And Discontinued Operations (Summary Of Key Valuation Input Assumptions By Division) (Details)
Acquisition And Discontinued Operations (Summary Of Loan Valuations By Division In Each Segment) (Details)
Acquisition And Discontinued Operations (Tables)
Allowance For Credit Losses
Allowance For Credit Losses (Narrative) (Details)
Allowance For Credit Losses (Schedule Of Allowance For Credit Losses And Recorded Investment In Finance Receivables) (Details)
Allowance For Credit Losses (Schedule Of Allowance For Credit Losses And Recorded Investment In Finance Receivables) (Parenthetical) (Details)
Allowance For Credit Losses (Tables)
Borrowings
Borrowings (Narrative) (Details)
Borrowings (Schedule Of Fhlb Balances) (Details)
Borrowings (Schedule Of Fhlb Balances) (Parenthetical) (Details)
Borrowings (Schedule Of Long-Term Borrowings) (Details)
Borrowings (Tables)
Business And Summary Of Significant Accounting Policies
Business And Summary Of Significant Accounting Policies (Narrative) (Details)
Business And Summary Of Significant Accounting Policies (Policies)
Business Segment Information
Business Segment Information (Segment Pre-Tax Income (Loss)) (Details)
Business Segment Information (Tables)
Commitments
Commitments (Narrative) (Details)
Commitments (Summary Of Commitments) (Details)
Commitments (Tables)
Contingencies
Contingencies (Narrative) (Details)
Deposits
Deposits (Narrative) (Details)
Deposits (Schedule Of Certificates Of Deposit $100 Thousand Or More) (Details)
Deposits (Schedule Of Detail On Deposit Types) (Details)
Deposits (Schedule Of Maturities Of Time Deposits) (Details)
Deposits (Tables)
Derivative Financial Instruments
Derivative Financial Instruments (Carrying Value Of Hedged Items And Associated Cumulative Hedging Adjustment Relating For Fair Value Hedges) (Details)
Derivative Financial Instruments (Carrying Value Of Hedged Items And Associated Cumulative Hedging Adjustment Relating For Fair Value Hedges) (Parenthetical) (Details)
Derivative Financial Instruments (Gains (Losses) Of Fair Value Hedges Recognized As Interest Expense) (Details)
Derivative Financial Instruments (Gains (Losses) Of Non-Qualifying Hedges Recognized As Other Non-Interest Income) (Details)
Derivative Financial Instruments (Notional Amount And Fair Values Of Derivative Financial Instruments) (Details)
Derivative Financial Instruments (Notional Amount And Fair Values Of Derivative Financial Instruments) (Parenthetical) (Details)
Derivative Financial Instruments (Pre-Tax Net Gains (Losses) Relating To Derivatives Designated As Net Investment Hedges) (Details)
Derivative Financial Instruments (Tables)
Fair Value
Fair Value (Assets And Liabilities Measured At Fair Value On A Recurring Basis) (Details)
Fair Value (Carrying And Estimated Fair Values Of Financial Instruments) (Details)
Fair Value (Carrying Value Of Assets Measured At Fair Value On A Non-Recurring Basis) (Details)
Fair Value (Changes In Estimated Fair Value For Financial Assets And Liabilities Measured On Recurring Basis) (Details)
Fair Value (Narrative) (Details)
Fair Value (Quantitative Information About Level 3 Fair Value Measurements-Recurring) (Details)
Fair Value (Tables)
Goodwill And Intangible Assets
Goodwill And Intangible Assets (Narrative) (Details)
Goodwill And Intangible Assets (Summary Of Goodwill) (Details)
Goodwill And Intangible Assets (Summary Of Intangible Assets Rollforward) (Details)
Goodwill And Intangible Assets (Summary Of Intangible Assets) (Details)
Goodwill And Intangible Assets (Tables)
Income Taxes
Income Taxes (Narrative) (Details)
Investment Securities
Investment Securities (Amortized Cost And Fair Value Of Afs And Htm Securities) (Details)
Investment Securities (Narrative) (Details)
Investment Securities (Schedule Of Afs And Htm - Estimated Unrealized Losses) (Details)
Investment Securities (Schedule Of Amortized Cost And Fair Value Maturities With Changes Recorded In Net Income) (Details)
Investment Securities (Schedule Of Carrying Value Of Investment Securities) (Details)
Investment Securities (Schedule Of Carrying Value Of Investment Securities) (Parenthetical) (Details)
Investment Securities (Schedule Of Interest And Dividend Income) (Details)
Investment Securities (Tables)
Leases
Leases (Narrative) (Details)
Leases (Schedule Of Lease Income Related To Company's Operating And Finance Leases) (Details)
Leases (Schedule Of Lease Income Related To Company's Operating And Finance Leases) (Parenthetical) (Details)
Leases (Schedule Of Supplemental Balance Sheet And Cash Flow Information Related To Leases) (Details)
Leases (Tables)
Loans
Loans (Commercial Loans - By Risk Rating) (Details)
Loans (Commercial Loans - By Risk Rating) (Parenthetical) (Details)
Loans (Components Of Net Investment) (Details)
Loans (Impaired Loans) (Details)
Loans (Impaired Loans) (Parenthetical) (Details)
Loans (Loans - Delinquency Status) (Details)
Loans (Loans - Delinquency Status) (Parenthetical) (Details)
Loans (Loans On Non-Accrual Status) (Details)
Loans (Loans On Non-Accrual Status) (Parenthetical) (Details)
Loans (Narrative) (Details)
Loans (Pcd Loans) (Details)
Loans (Pcd Loans) (Parenthetical) (Details)
Loans (Pci Loans) (Details)
Loans (Schedule Of Changes To The Accretable Yield For Pci Loans) (Details)
Loans (Schedule Of Consumer Loans Current Fico Score Distributions) (Details)
Loans (Schedule Of Consumer Loans Current Fico Score Distributions) (Parenthetical) (Details)
Loans (Schedule Of Consumer Loans Ltv Distributions) (Details)
Loans (Schedule Of Consumer Loans Ltv Distributions) (Parenthetical) (Details)
Loans (Schedule Of Loans By Product) (Details)
Loans (Schedule Of Loans By Segment, Based On Obligor Location) (Details)
Loans (Schedule Of Loans In Process Of Foreclosure) (Details)
Loans (Schedule Of Loans In Process Of Foreclosure) (Parenthetical) (Details)
Loans (Summary Of Recorded Investments Of Modifications) (Details)
Loans (Summary Of Recorded Investments Of Tdrs (Details)
Loans (Tables)
Regulatory Capital
Regulatory Capital (Narrative) (Details)
Regulatory Capital (Tables)
Regulatory Capital (Tier 1 Capital And Total Capital Components) (Details)
Regulatory Capital (Tier 1 Capital And Total Capital Components) (Parenthetical) (Details)
Stockholder's Equity (Schedule Of Common Stock Activity) (Details)
Stockholders' Equity
Stockholders' Equity (Before- And After-Tax Components Of Oci) (Details)
Stockholders' Equity (Changes In Accumulated Other Comprehensive Income (Loss) By Component) (Details)
Stockholders' Equity (Components Of Accumulated Other Comprehensive Income (Loss) ("Aoci")) (Details)
Stockholders' Equity (Narrative) (Details)
Stockholders' Equity (Tables)
Variable Interest Entities
Variable Interest Entities (Assets And Liabilities In Unconsolidated Vies) (Details)
Variable Interest Entities (Narrative) (Details)
Variable Interest Entities (Tables)
Ticker: CIT
CIK: 1171825
Form Type: 10-Q Quarterly Report
Accession Number: 0001564590-20-021328
Submitted to the SEC: Tue May 05 2020 5:06:07 PM EST
Accepted by the SEC: Tue May 05 2020
Period: Tuesday, March 31, 2020
Industry: National Commercial Banks

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