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CIT Reports First Quarter 2011 Net Income of $66 Million, $0.33 Per Diluted Share
Cease and Desist Orders lifted on CIT Bank
Transferred Small Business Lending platform to CIT Bank
Issued $2 billion of new corporate debt
Funded loan and lease volume of $1.3 billion
ncreased book value to $44.85 per share
Wednesday, April 27, 2011 06:30 AM
We continue to make progress rebuilding CIT

NEW YORK--(BUSINESS WIRE)--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 March 31, 2011 of $66 million, $0.33 per diluted share, down from $145 million, $0.72 per diluted share a year ago1 on reduced fresh start accounting (“FSA”) benefits.

"We continue to make progress rebuilding CIT," said John A. Thain, Chairman and Chief Executive Officer. "We are advancing our bank strategy, optimizing our portfolio, managing expenses and reducing our cost of capital. We will continue to focus on prudently growing our core businesses and remain committed to creating long-term shareholder value."

Summary of First Quarter Financial Results

First quarter results reflect lower funding and credit costs, gains on asset sales, reduced operating costs and an increase in income tax provision. Net income declined from first quarter 2010 primarily due to a $364 million decrease in net FSA accretion, reflecting fewer asset prepayments and the accelerated repayment of debt carried at a discount. Current quarter debt prepayment fees of $35 million were more than double those in the 2010 first quarter.

Total assets of $51 billion were essentially unchanged from December 31, 2010 and $8 billion lower than the 2010 first quarter. Total loans decreased $1 billion from last quarter, reflecting asset sales and moderating net portfolio run-off and declined almost $9 billion from a year ago. Operating lease equipment balances have been fairly consistent over the last year at around $11 billion. Funded new business volume decreased modestly from the prior quarter and increased 47% from the 2010 first quarter to $1.3 billion, with increases primarily in the Corporate Finance and Transportation Finance segments.

Net finance revenue2 declined due to lower average earning assets and reduced FSA accretion. Average earning assets2 of $35 billion were down $2 billion from the prior quarter and $10 billion from the 2010 first quarter. Net operating lease revenue increased from the prior quarter, reflecting improvements in Transportation Finance, and was flat with the 2010 first quarter. As a percentage of average earning assets, net finance revenue was 2.24%, down from the prior quarter and the 2010 first quarter as reduced FSA accretion more than offset the benefit from the prepayment of high cost debt. Excluding FSA and the effect of prepayment penalties on high-cost debt in all periods, margin was 1.46%, up from 0.56% in the prior quarter and 0.71% in the 2010 first quarter. The improvements were primarily driven by lower funding costs, including benefits from amortizing secured borrowings, and the increase over the prior quarter also reflected an increased yield on the portfolio.

The provision for credit losses was $123 million, a decrease of 32% from the prior quarter, reflecting reduced charge-offs, lower non-accrual balances and stable credit quality trends. The provision for credit losses declined 45% from the 2010 first quarter, during which loss reserves were re-established.

Other income (excluding operating lease rentals) increased 24% from the prior quarter and 85% from the 2010 first quarter as gains on asset sales nearly doubled from each period and we benefited from favorable foreign exchange and derivative marks. Recoveries of $32 million on receivables charged-off prior to the adoption of FSA were down from 2010 periods.

Operating expenses were $216 million. Excluding restructuring charges of approximately $7 million, operating expenses declined 4% from the prior quarter and 16% from the 2010 first quarter to $210 million. Operating expenses excluding restructuring charges as a percentage of average earning assets were approximately 2.4%, flat with the prior quarter and up from the 2010 first quarter.

Provision for income taxes was $66 million reflecting income tax expense on taxable income generated by international operations and no income tax benefit on our U.S. losses due to a full valuation allowance. The income tax provision is primarily driven by the mix of domestic and international earnings. The provision also includes reserves for uncertain tax positions and incremental valuation allowances on certain foreign losses.

Credit and Allowance for Loan Losses

Non-accrual loans decreased 19% and 32%, respectively, from December 31 and March 31, 2010, to $1.3 billion, reflecting improvement in Corporate Finance, including asset sales. The decrease from the 2010 first quarter also included a reduction in Transportation Finance, while Trade Finance contributed to the decline from the prior quarter.

Net charge-offs were $141 million, compared to $179 million in the prior quarter and $78 million in the 2010 first quarter. The reduction from the prior quarter was driven primarily by Vendor Finance, reflecting credit quality improvements and the impact on the prior quarter of a refinement to delinquency-based charge-off practices. Corporate Finance charge-offs, which were concentrated in the energy portfolio, increased 17% from the prior quarter to $117 million largely reflecting the write-off of amounts for which specific reserves were established as of December 31, 2010. In total, the provision for credit losses was $123 million, down from $182 million last quarter and $226 million in the 2010 first quarter. Net charge-offs and the provision for credit losses do not reflect $32 million, $69 million and $44 million of recoveries of pre-FSA charge-offs recorded in other income for the 2011 first quarter and the fourth and first quarters of 2010, respectively.

Management also evaluates credit performance using credit metrics that exclude the impact of FSA. On this basis, gross charge-offs were $210 million for the current quarter, down from $306 million in the prior quarter and $237 million in the 2010 first quarter. On the same basis, non-accrual loans of $1.6 billion decreased from $2.0 billion at December 31, 2010 and $3.1 billion at March 31, 2010.

The allowance for loan losses decreased to $402 million from $416 million at December 31, 2010, reflecting the reduction in specific reserves discussed above. As a percentage of finance receivables, the allowance was 1.7%, unchanged from last quarter.

Capital and Funding

Preliminary Tier 1 and Total Capital ratios at March 31, 2011 were 20.1% and 21.0%, respectively, up from 19.1% and 19.9% at December 31, 2010. Preliminary risk-weighted assets totaled $42.4 billion, down from $44.2 billion due to lower asset levels. Book value per share at March 31, 2011 was $44.85, up from $44.48 at December 31, 2010.

Cash and short-term investment securities totaled $11.8 billion at March 31, 2011, comprised of $6.1 billion of short-term U.S. Treasuries and $5.7 billion of cash, up from $11.2 billion of cash at December 31, 2010. Cash and short-term investment securities consisted of $6.2 billion at the bank holding company, $1.2 billion at CIT Bank, $1.1 billion at operating subsidiaries and $3.3 billion in restricted balances at March 31, 2011.

During the 2011 first quarter, we redeemed $1.0 billion of the 7% Series A Notes due in 2013 and the remaining $0.75 billion of 10.25% Series B Notes all at a redemption price of 102% of the aggregate principal amount redeemed. The acceleration of FSA amortization/(accretion) on the Series A Notes and Series B Notes was $25 million and $(14) million, respectively, and resulted in a net increase of $11 million to interest expense.

In March, we issued $2 billion of new Series C Second-Priority Secured Notes, consisting of $1.3 billion of three year 5.25% fixed rate notes and $700 million of seven year 6.625% fixed rate notes. The covenants in the new Series C Notes are less restrictive than those in the outstanding Series A Notes, and more consistent with covenants in investment grade-rated bonds. The proceeds of the transaction will be used, in conjunction with available cash, to redeem an additional $2.5 billion of 7% Series A Notes at a redemption price of 102% of the aggregate principal amount during the second quarter. This redemption will include approximately $1.1 billion principal amount of remaining 2013 Series A Notes and $1.4 billion principal amount of the 2014 Series A Notes. The acceleration of FSA amortization on the 2013 and 2014 maturities will add approximately $65 million and $50 million, respectively, to second quarter interest expense.

CIT also renewed its $1 billion committed U.S. Vendor Finance conduit facility, with significantly reduced costs, increased advance rate and lengthened expiration and maturity term. The committed revolving period of the facility now expires in March 2013 and the facility has a final maturity in 2020.

Segment Highlights

Corporate Finance

Corporate Finance pre-tax earnings were $136 million, improved from $55 million in the prior quarter and down from $143 million in the 2010 first quarter, reflecting lower interest income and provision for credit losses and higher other income. The reduction in interest income was in line with lower financing and leasing assets, which declined to $8.1 billion from $8.8 billion at December 31, 2010 and $12.6 billion at March 31, 2010, largely due to sales and prepayments, partially offset by new business activity. New committed loan volume was $817 million, and new funded volume was $471 million, both down from the prior quarter but up significantly from the 2010 first quarter. Essentially all of U.S. funded volume in the current quarter was originated by CIT Bank, up from 73% for the 2010 fourth quarter. Other income rose from the prior quarter and 2010 first quarter on gains from asset and equity investment sales, partially offset by lower recoveries on loans charged-off prior to the adoption of FSA. Non-accrual loans declined 19% to $1.0 billion from $1.2 billion at December 31, 2010 on sales, payments and charge-offs, and new inflows to non-accruals declined from the prior quarter as well. Net charge-offs were $117 million, up from $100 million in the prior quarter, whereas the provision for credit losses declined from the prior quarter, which included a large addition to small business lending reserves.

Transportation Finance

Transportation Finance pre-tax earnings were $43 million, up from $10 million in the prior quarter and $15 million for the 2010 first quarter. Results reflect lower interest expense due to changes in segment allocations. (See Corporate and Other below.) The first quarter also benefited from improved equipment utilization and lease rates. All aircraft were leased at March 31, 2011, including commitments. Rail fleet utilization, including commitments, increased to above 95% from 94% at December 31, 2010. During the quarter, aircraft renewal rates improved modestly, while rentals in rail continued their sequential increase off cyclical lows. Net charge-offs were down from the 2010 fourth quarter and non-accrual loans were unchanged from December 31, 2010. Assets held for sale increased as we transferred 8 aircraft to held-for-sale during the quarter. We placed 7 new aircraft in the first quarter and have lease commitments for all aircraft to be delivered during the next 12 months. In addition, our rail business entered into a commitment to purchase 3,500 railcars to be delivered beginning in the 2011 second quarter through the 2012 second quarter.

Trade Finance

Trade Finance reported a pre-tax loss of $3 million for the quarter, compared to pre-tax income of $5 million in the prior quarter, but improved from a loss of $28 million for the 2010 first quarter. The decline from the prior quarter reflected lower recoveries on accounts charged-off prior to the adoption of FSA, lower commissions from seasonally lower factoring volume and a slightly higher provision for credit losses. Factoring volume was $6.1 billion for the first quarter, down from $7.0 billion for the prior quarter and $6.4 billion for the 2010 first quarter, reflecting the runoff of our European factoring operation and normal seasonality compared to the prior quarter. Excluding the European operation, factored volume was up 2.7% from the first quarter of 2010. The client base further stabilized with continued positive trends in net new business generation. Net interest revenue benefited from lower non-accrual account balances which declined 40% from December 31, 2010, primarily due to pay-downs, while net charge-offs also declined.

Vendor Finance

Vendor Finance pre-tax earnings were $14 million, down from $49 million in the prior quarter and $114 million for the 2010 first quarter, reflecting increased pre-FSA asset yields, offset by lower asset levels and reduced FSA accretion income. Total financing and leasing assets declined to $5.2 billion from $5.4 billion at December 31, 2010 and were down $2.7 billion from March 31, 2010, as sales and net portfolio collections outpaced new business volume. We funded $539 million of new business volume in the first quarter, which was down modestly from the prior quarter and up slightly from the 2010 first quarter. Excluding volume associated with the Australia and New Zealand platforms sold in 2010, volume rose 16% from the 2010 first quarter. Yields on newly originated assets declined slightly from last quarter but remained double-digit. Provision for credit losses increased $42 million from the prior quarter’s low level due to refined reserve estimates. Non-accrual loans were down 5% from December 31, 2010, while net charge-offs were down significantly.

Consumer Finance

Consumer Finance pre-tax earnings were $3 million, up from earnings of $1 million in the prior quarter and down from $9 million for the 2010 first quarter. Student loan portfolio balances declined $410 million, reflecting the sale of approximately $250 million of government-guaranteed loans and portfolio run-off. We completed the outsourcing of servicing of the remaining government-guaranteed student loan portfolio as scheduled.

Corporate and Other

Corporate and other includes certain costs that had been previously allocated to the segments, including prepayment penalty fees on high-cost debt payments and certain corporate liquidity costs. In addition, we continued to refine the risk-based economic capital allocated to each of the segments. These changes reduced the interest expense charged to Transportation Finance, but were not significant to the other segments.

CIT Bank

On April 20, 2011, CIT announced that the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions (UDFI) terminated their Cease and Desist orders on CIT Bank that were jointly issued on July 16, 2009.

CIT Bank loan origination activity continued to increase. Committed loan volume rose 15% from the prior quarter to $777 million, of which $409 million was funded. Total assets were $6.7 billion, down from $6.9 billion at December 31, 2010, as cash was used to pay down maturing deposits and the run-off of the consumer loans outpaced the increase in commercial loans. Total loans were $5.2 billion, down slightly from December 31, 2010, and total deposits declined modestly to $4.3 billion. The preliminary Total Capital ratio at the Bank was 56.4% and the Tier 1 Leverage ratio was 25.6%. In addition, during the 2011 first quarter we obtained the necessary regulatory approvals and transferred our small business lending operations into CIT Bank.

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, April 27, 2011, 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) on May 8, 2011, by dialing 888-286-8010 for U.S. and Canadian callers or 617-801-6888 for international callers with the access code 79442173, 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 $35 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 Comparisons to the 2010 first quarter balances in this press release are to the previously restated amounts disclosed in our December 31, 2010 Form 10-K.

2 Net finance revenue and average earning assets are non-GAAP measures, see reconciliation of non-GAAP to GAAP financial information.

             
CIT GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
(dollars in millions, except per share data)
             
    Quarters Ended
    March 31,   December 31,   March 31,
    2011   2010   2010(1)
Interest income          
  Interest and fees on loans $ 635.5     $ 746.9     $ 1,097.4  
  Interest and dividends on investments   7.7       7.1       7.3  
  Total interest income   643.2       754.0       1,104.7  
Interest expense          
  Interest on long-term borrowings   (674.5 )     (679.1 )     (810.6 )
  Interest on deposits   (24.4 )     (24.6 )     (20.8 )
  Total interest expense   (698.9 )     (703.7 )     (831.4 )
Net interest revenue   (55.7 )     50.3       273.3  
Provision for credit losses   (123.4 )     (182.4 )     (226.1 )
Net interest revenue, after credit provision   (179.1 )     (132.1 )     47.2  
Other income          
  Rental income on operating leases   413.3       398.3       425.8  
  Other   278.2       223.8       150.4  
  Total other income   691.5       622.1       576.2  
Other expenses          
  Depreciation on operating lease equipment   (160.5 )     (166.6 )     (172.7 )
  Operating expenses   (216.4 )     (250.0 )     (261.7 )
  Total other expenses   (376.9 )     (416.6 )     (434.4 )
Income before provision for income taxes   135.5       73.4       189.0  

(Provision) benefit for income taxes

  (65.7 )     2.0       (43.4 )
Net income before attribution of noncontrolling interests   69.8       75.4       145.6  
Net income attributable to noncontrolling interests, after tax   (4.2 )     (0.6 )     (1.0 )
Net income $ 65.6     $ 74.8     $ 144.6  
             
Basic earnings per common share $ 0.33     $ 0.37     $ 0.72  
Diluted earnings per common share $ 0.33     $ 0.37     $ 0.72  
Average number of common shares - basic (thousands)   200,605       200,359       200,040  
Average number of common shares - diluted (thousands)   200,933       200,905       200,076  
                       
(1) Reflects previously restated balances as disclosed in the Company's December 31, 2010 Form 10-K.
             
CIT GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(dollars in millions, except per share data)
             
    March 31,   December 31,   March 31,
    2011   2010   2010(1)
             
Assets          
  Total cash and deposits $ 5,686.8     $ 11,204.0     $ 10,065.6  
  Investment securities   6,416.9       328.5       336.1  
  Trading assets at fair value - derivatives   13.9       25.7       93.5  
  Assets held for sale   1,174.4       1,218.5       1,368.8  
  Loans   23,736.7       24,500.5       32,459.6  
  Allowance for loan losses   (402.5 )     (416.2 )     (213.9 )
  Total loans, net of allowance for loan losses   23,334.2       24,084.3       32,245.7  
             
  Operating lease equipment, net   11,040.2       11,136.7       10,933.6  
  Goodwill   277.4       277.4       277.4  
  Intangible assets, net   99.1       119.2       209.1  
  Unsecured counterparty receivable   516.1       534.5       914.6  
  Other assets   2,116.2       2,029.4       2,102.9  
  Total assets $ 50,675.2     $ 50,958.2     $ 58,547.3  
             
Liabilities          
  Deposits $ 4,294.6     $ 4,536.2     $ 4,806.6  
  Trading liabilities at fair value - derivatives   205.4       126.3       55.7  
  Credit balances of factoring clients   1,110.7       935.3       881.1  
  Other liabilities   2,383.9       2,466.9       2,406.4  
  Long-term borrowings          
  Secured borrowings   10,347.7       10,965.8       13,668.3  
  Secured credit facility and expansion facility   3,040.9       3,042.6       6,931.9  
  Series A notes   18,142.6       19,037.9       18,807.0  
  Series B notes   -       765.8       2,196.5  
  Series C notes   2,000.0       -       -  
  Other debt   155.4       167.7       232.8  
  Total long-term borrowings   33,686.6       33,979.8       41,836.5  
  Total liabilities   41,681.2       42,044.5       49,986.3  
Equity          
Stockholders' equity          
  Common stock   2.0       2.0       2.0  
  Paid-in capital   8,440.4       8,434.1       8,403.8  
  Accumulated earnings   563.9       498.3       126.2  
 

Accumulated other comprehensive (loss) income

  (4.1 )     (9.6 )     35.2  
  Treasury stock, at cost   (9.9 )     (8.8 )     (0.1 )
  Total common stockholders' equity   8,992.3       8,916.0       8,567.1  
Noncontrolling interests   1.7       (2.3 )     (6.1 )
Total equity   8,994.0       8,913.7       8,561.0  
  Total liabilities and equity $ 50,675.2     $ 50,958.2     $ 58,547.3  
             
Book Value Per Common Share          
  Book value per common share $ 44.85     $ 44.48     $ 42.83  
  Tangible book value per common share $ 42.97     $ 42.50     $ 40.40  
 
(1) Reflects previously restated balances as disclosed in the Company's December 31, 2010 Form 10-K.
               
CIT GROUP INC. AND SUBSIDIARIES
SELECT BALANCES
(dollars in millions)
               
INCOME STATEMENT ITEMS   Quarters Ended  
    March 31, 2011   December 31, 2010   March 31, 2010(1)  
Other Income              
               
Recoveries of pre-FSA charge-offs   $ 31.7     $ 69.3     $ 44.0    
Gains on loan and portfolio sales     73.9       35.3       37.0    
Gains on sales of leasing equipment     40.0       28.4       27.9    
Fees, commissions and other revenue     44.1       28.0       42.6    
Factoring commissions     33.8       36.6       36.2    
Counterparty receivable accretion     31.8       17.7       35.8    

Gain (loss) on non-qualifying hedge derivatives and foreign currency
exchange

    22.9       8.5       (73.1 )  
Total other income   $ 278.2     $ 223.8     $ 150.4    
               
Operating Expenses              
Salaries and general operating expenses:              
Compensation and benefits   $ 116.6     $ 114.2     $ 140.3    
Professional fees     29.6       37.4       29.7    
Technology     18.7       18.0       19.2    
Occupancy expense     10.1       10.8       14.9    
Provision for severance and facilities exiting activities     6.6       31.5       11.9    
Other expenses     34.8       38.1       45.7    
Total operating expenses   $ 216.4     $ 250.0     $ 261.7    
               
Fresh Start Accounting:              
Accretion / (Amortization)              
Interest income   $ 249.7     $ 331.4     $ 499.7    
Interest expense     (205.3 )     (106.0 )     (94.7 )  
Rental income on operating leases     (19.0 )     (20.5 )     (26.2 )  
Other income     31.8       17.7       35.8    
Depreciation expense     61.3       66.5       68.5    
Total   $ 118.5     $ 289.1     $ 483.1    
               
BALANCE SHEET ITEMS              
Fresh Start Accounting:   Accretable   Non-accretable   Accretable Non-accretable
(Discount) / Premium   March 31, 2011   December 31, 2010
Loans   $ (1,303.0 )   $ (263.9 )   $ (1,555.4 ) $ (372.2 )
Operating lease equipment, net     (2,954.1 )     -       (3,022.0 )   -  
Goodwill and Intangible assets     99.1       277.4       119.2     277.4  
Other assets     (191.6 )     -       (223.4 )   -  
Total assets   $ (4,349.6 )   $ 13.5     $ (4,681.6 ) $ (94.8 )
Deposits   $ 30.5     $ -     $ 38.5   $ -  
Long-term borrowings     (2,735.3 )     -       (2,948.5 )   -  
Other liabilities     -       313.4       -     351.6  
Total liabilities   $ (2,704.8 )   $ 313.4     $ (2,910.0 ) $ 351.6  
 
(1) Reflects previously restated balances as disclosed in the Company's December 31, 2010 Form 10-K.
CIT GROUP INC. AND SUBSIDIARIES
(dollars in millions)
                       
    March 31,       December 31,       March 31,  
    2011       2010       2010(1)  
FINANCING AND LEASING ASSETS                      
Corporate Finance                      
Loans   $ 7,896.1       $ 8,482.2       $ 12,145.3    
Operating lease equipment, net     72.8         83.2         135.7    
Assets held for sale     171.0         219.2         287.8    
Financing and leasing assets     8,139.9         8,784.6         12,568.8    
Transportation Finance                      
Loans     1,282.6         1,388.9         1,778.3    
Operating lease equipment, net     10,545.9         10,618.8         10,177.5    
Assets held for sale     261.3         2.8         11.6    
Financing and leasing assets     12,089.8         12,010.5         11,967.4    
Trade Finance                      
Loans     2,622.6         2,387.4         2,794.1    
Vendor Finance                      
Loans     4,036.5         4,166.1         6,795.9    
Operating lease equipment, net     421.5         434.7         620.4    
Assets held for sale     738.6         749.8         479.8    
Financing and leasing assets     5,196.6         5,350.6         7,896.1    
Consumer                      
Loans - student lending     7,869.0         8,035.5         8,864.8    
Loans - other     29.9         40.4         81.2    
Assets held for sale     3.5         246.7         589.6    
Financing and leasing assets     7,902.4         8,322.6         9,535.6    
Total financing and leasing assets   $ 35,951.3       $ 36,855.7       $ 44,762.0    
                       
INVESTMENT SECURITIES                      
U.S. Treasuries   $ 6,125.5       $ -       $ -    
Other debt and equity investments     291.4         328.5         336.1    
Total investment securities   $ 6,416.9       $ 328.5       $ 336.1    
                       
OTHER ASSETS                      
Deposits on commercial aerospace equipment   $ 558.4       $ 609.7       $ 647.7    
Other counterparty receivables     472.8         310.7         61.0    
Deferred debt costs     148.0         126.4         21.7    
Tax receivables, other than income taxes     121.0         125.1         197.3    

Servicer and maintenance fee receivables

    116.6         115.3         104.2    
Executive retirement plan and deferred compensation     116.2         110.2         103.1    
Accrued interest and dividends     114.0         97.7         206.4    
Prepaid expenses     78.7         87.5         78.0    
Furniture and fixtures     78.2         79.3         93.8    
Other     312.3         367.5         589.7    
Total other assets   $ 2,116.2       $ 2,029.4       $ 2,102.9    
                       
AVERAGE BALANCES AND RATES                      
    Quarter Ended   Quarter Ended   Quarter Ended
   

March 31, 2011

 

December 31, 2010

 

March 31, 2010(1)

Assets  

Average
Balance

  Rate  

Average
Balance

  Rate  

Average
Balance

Rate
Deposits with banks   $ 9,245.2   0.3 %   $ 10,930.6   0.2 %   $ 9,531.1   0.2 %
Investments     1,841.1   0.3 %     340.6   1.9 %     347.7   3.9 %
Loans (including held for sale assets)     25,032.1   10.6 %     27,065.0   11.4 %     34,955.0   12.9 %

Total interest earning assets

    36,118.4   7.3 %     38,336.2   8.1 %     44,833.8   10.1 %
Operating lease equipment, net     11,139.5   9.1 %     11,017.3   8.4 %     10,945.2   9.2 %
Other     2,885.1         2,951.1         3,890.3    
Total average assets   $ 50,143.0       $ 52,304.6       $ 59,669.3    
Liabilities                      
Deposits   $ 4,461.9   2.2 %   $ 4,644.4   2.1 %   $ 5,005.8   1.7 %
Long-term borrowings     33,125.1   8.1 %     35,194.3  

7.7

%     42,929.3   7.6 %
Total interest-bearing liabilities     37,587.0   7.4 %     39,838.7   7.1 %     47,935.1   6.9 %
Credit balances of factoring clients     965.0         954.9         866.8    
Other     11,591.0         11,511.0         10,867.4    
Total average liabilities and equity   $ 50,143.0       $ 52,304.6       $ 59,669.3    
 
(1) Reflects previously restated balances as disclosed in the Company's December 31, 2010 Form 10-K.
                         
CIT GROUP INC. AND SUBSIDIARIES
(dollars in millions)
                         
CREDIT METRICS - AFTER FRESH START ACCOUNTING                  
      Quarter Ended   Quarter Ended   Quarter Ended
Gross Charge-offs To Average Finance Receivables   March 31, 2011   December 31, 2010   March 31, 2010(1)
  Corporate Finance   $ 125.0       6.09 %   $ 109.8   4.73 %   $ 62.2     1.98 %
  Transportation Finance     0.7       0.22 %     4.8   1.28 %     -     -  
  Trade Finance     6.2       1.05 %     6.8   1.07 %     2.7     0.38 %
  Vendor Finance     26.3       2.56 %     79.8   6.60 %     10.3     0.53 %
  Commercial Segments     158.2       3.95 %     201.2   4.43 %     75.2     1.20 %
  Consumer     1.2       0.06 %     4.2   0.21 %     4.5     0.19 %
  Total   $ 159.4       2.66 %   $ 205.4   3.12 %   $ 79.7     0.92 %
                         
Net Charge-offs To Average Finance Receivables(A)                      
  Corporate Finance   $ 117.0       5.70 %   $ 100.1   4.31 %   $ 60.8     1.93 %
  Transportation Finance     0.7       0.20 %     4.8   1.28 %     -     -  
  Trade Finance     4.3       0.74 %     6.2   0.98 %     2.7     0.38 %
  Vendor Finance     17.7       1.73 %     64.4   5.32 %     9.5     0.49 %
  Commercial Segments     139.7       3.49 %     175.5   3.86 %     73.0     1.17 %
  Consumer     0.9       0.05 %     4.0   0.20 %     4.5     0.19 %
  Total   $ 140.6       2.34 %   $ 179.5   2.73 %   $ 77.5     0.90 %
                         
Non-accruing Loans To Finance Receivables(B)   March 31, 2011   December 31, 2010   March 31, 2010(1)
  Corporate Finance   $ 1,004.1       12.72 %   $ 1,239.8   14.62 %   $ 1,468.1     12.08 %
  Transportation Finance     62.1       4.84 %     63.2   4.55 %     172.8     9.72 %
  Trade Finance     98.0       3.74 %     164.4   6.89 %     90.5     3.24 %
  Vendor Finance     140.9       3.49 %     147.9   3.55 %     179.4     2.64 %
  Commercial Segments     1,305.1       8.24 %     1,615.3   9.84 %     1,910.8     8.13 %
  Consumer     0.9       0.01 %     0.7   0.01 %     0.7     0.01 %
  Total   $ 1,306.0       5.50 %   $ 1,616.0   6.60 %   $ 1,911.5     5.89 %
(A) Net charge-offs do not include recoveries of $31.7 million, $69.3 million, and $44.0 million recorded in Other Income for the quarters ended March 31, 2011 and December 31, and March 31, 2010.
(B) Non-accrual loans include loans held for sale. Non-accrual loans at March 31, 2010 do not include balances associated with an entity, which is now consolidated.
CREDIT METRICS - BEFORE FRESH START ACCOUNTING (NON-GAAP)                  
      Quarter Ended   Quarter Ended   Quarter Ended

Gross Charge-offs To Average Finance Receivables

  March 31, 2011   December 31, 2010   March 31, 2010(1)
  Corporate Finance   $ 167.7       7.31 %   $ 182.9   6.95 %   $ 135.9     3.60 %
  Transportation Finance     0.7       0.20 %     5.0   1.21 %     -     -  
  Trade Finance     6.2       1.05 %     6.8   1.07 %     4.7     0.66 %
  Vendor Finance     32.4       3.04 %     101.5   8.03 %     67.9     3.23 %
  Commercial Segments     207.0       4.79 %     296.2   5.99 %     208.5     2.94 %
  Consumer     3.3       0.16 %     9.5   0.44 %     28.6     1.08 %
  Total   $ 210.3       3.27 %   $ 305.7   4.30 %   $ 237.1     2.43 %
                         
Non-accruing Loans To Finance Receivables   March 31, 2011   December 31, 2010   March 31, 2010(1)
  Corporate Finance   $ 1,282.3       14.72 %   $ 1,604.0   16.76 %   $ 2,280.2     15.38 %
  Transportation Finance     70.2       5.00 %     71.3   4.64 %     185.3     9.18 %
  Trade Finance     98.0       3.74 %     164.4   6.89 %     90.5     3.23 %
  Vendor Finance     185.8       4.44 %     174.9   4.02 %     324.6     4.43 %
  Commercial Segments     1,636.3       9.67 %     2,014.6   11.29 %     2,880.6     10.68 %
  Consumer     0.9       0.01 %     1.0   0.01 %     200.6     1.99 %
  Total   $ 1,637.2       6.47 %   $ 2,015.6   7.63 %   $ 3,081.2     8.31 %
Credit metrics before fresh start accounting are non-GAAP measurements and are used by management for credit trend analysis.
                         
PROVISION AND ALLOWANCE COMPONENTS                      
      Provision for Credit Losses    

Allowance for Loan Losses

      Quarters Ended          
     

March

31,

 

December

31,

 

March

31,

   

March

31,

 

December

31,

      2011   2010   2010(1)     2011   2010
  Specific reserves - impaired loans   $ (28.4 )   $ 47.1     $ 28.4       $ 92.9   $ 121.3  
  Non-specific reserves     11.2       (44.2 )     120.2         309.6     294.9  
  Charge-offs     140.6       179.5       77.5         -     -  
  Totals   $ 123.4     $ 182.4     $ 226.1       $ 402.5   $ 416.2  
(1) Reflects previously restated balances as disclosed in the Company's December 31, 2010 Form 10-K.
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 March 31, 2011                                
Total interest income   $ 298.7     $ 42.5     $ 17.1     $ 208.3     $ 566.6     $ 70.8     $ 5.8     $ 643.2  
Total interest expense     (196.8 )     (210.5 )     (25.7 )     (133.0 )     (566.0 )     (53.0 )     (79.9 )     (698.9 )
Provision for credit losses     (74.5 )     (1.8 )     (3.3 )     (42.9 )     (122.5 )     (0.9 )     -       (123.4 )
Rental income on operating leases     6.5       324.7       -       82.1       413.3       -       -       413.3  
Other income, excluding rental income     163.8       24.3       37.1       31.6       256.8       3.1       18.3       278.2  
Depreciation on operating lease equipment     (2.9 )     (96.7 )     -       (60.9 )     (160.5 )     -       -       (160.5 )
Other expenses     (58.8 )     (39.8 )     (27.8 )     (71.7 )     (198.1 )     (17.4 )     (0.9 )     (216.4 )
Income (loss) before provision (benefit) for income taxes   $ 136.0     $ 42.7     $ (2.6 )   $ 13.5     $ 189.6     $ 2.6     $ (56.7 )   $ 135.5  
Funded new business volume   $ 470.7     $ 317.9     $ -     $ 538.8     $ 1,327.4     $ -     $ -     $ 1,327.4  
Average Earning Assets   $ 8,440.3     $ 12,053.7     $ 1,378.6     $ 5,271.7     $ 27,144.3     $ 8,049.8     $ -     $ 35,194.1  
Average Finance Receivables   $ 8,205.5     $ 1,352.2     $ 2,356.0     $ 4,101.5     $ 16,015.2     $ 7,984.8     $ -     $ 24,000.0  
                                 
Quarter Ended December 31, 2010                                
Total interest income   $ 360.8     $ 53.4     $ 21.7     $ 234.5     $ 670.4     $ 77.9     $ 5.7     $ 754.0  
Total interest expense     (225.6 )     (240.6 )     (34.0 )     (147.0 )     (647.2 )     (50.7 )     (5.8 )     (703.7 )
Provision for credit losses     (169.0 )     (7.4 )     (1.0 )     (1.0 )     (178.4 )     (4.0 )     -       (182.4 )
Rental income on operating leases     6.4       310.5       -       81.4       398.3       -       -       398.3  
Other income, excluding rental income     139.9       13.6       45.1       24.0       222.6       (5.8 )     7.0       223.8  
Depreciation on operating lease equipment     (3.7 )     (89.2 )     -       (73.7 )     (166.6 )     -       -       (166.6 )
Other expenses     (53.6 )     (30.4 )     (26.8 )     (68.9 )     (179.7 )     (16.1 )     (54.2 )     (250.0 )
Income (loss) before provision (benefit) for income taxes   $ 55.2     $ 9.9     $ 5.0     $ 49.3     $ 119.4     $ 1.3     $ (47.3 )   $ 73.4  
Funded new business volume   $ 496.7     $ 425.4     $ -     $ 584.4     $ 1,506.5     $ -     $ -     $ 1,506.5  
Average Earning Assets   $ 9,653.4     $ 11,930.1     $ 1,553.8     $ 5,464.0     $ 28,601.3     $ 8,450.2     $ -     $ 37,051.5  
Average Finance Receivables   $ 9,285.8     $ 1,508.8     $ 2,540.4     $ 4,834.1     $ 18,169.1     $ 8,146.5     $ -     $ 26,315.6  
                                 
Quarter Ended March 31, 2010(1)                                
Total interest income   $ 548.0     $ 63.7     $ 30.5     $ 362.0     $ 1,004.2     $ 95.9     $ 4.6     $ 1,104.7  
Total interest expense     (298.8 )     (258.3 )     (41.6 )     (167.9 )     (766.6 )     (66.8 )     2.0       (831.4 )
Provision for credit losses     (133.9 )     (1.3 )     (33.9 )     (52.5 )     (221.6 )     (4.5 )     -       (226.1 )
Rental income on operating leases     8.8       306.8       -       110.8       426.4       -       (0.6 )     425.8  
Other income, excluding rental income     102.6       22.2       49.2       38.8       212.8       5.8       (68.2 )     150.4  
Depreciation on operating lease equipment     (3.6 )     (78.6 )     -       (90.7 )     (172.9 )     -       0.2       (172.7 )
Other expenses     (79.9 )     (39.6 )     (32.0 )     (86.9 )     (238.4 )     (21.5 )     (1.8 )     (261.7 )
Income (loss) before provision (benefit) for income taxes   $ 143.2     $ 14.9     $ (27.8 )   $ 113.6     $ 243.9     $ 8.9     $ (63.8 )   $ 189.0  
Funded new business volume   $ 145.4     $ 225.7     $ -     $ 532.3     $ 903.4     $ -     $ -     $ 903.4  
Average Earning Assets   $ 13,041.6     $ 12,004.0     $ 1,855.5     $ 8,545.4     $ 35,446.5     $ 9,630.9     $ -     $ 45,077.4  
Average Finance Receivables   $ 12,590.4     $ 1,841.4     $ 2,810.9     $ 7,779.1     $ 25,021.8     $ 9,460.2     $ -     $ 34,482.0  
(1) Reflects previously restated balances as disclosed in the Company's December 31, 2010 Form 10-K.
CIT GROUP INC. AND SUBSIDIARIES
(dollars in millions)
                       
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  
    March 31,       December 31,       March 31,  
    2011       2010       2010(3)  
Total net revenues(1)                      
Interest income   $ 643.2         $ 754.0         $ 1,104.7    
Rental income on operating leases     413.3           398.3           425.8    
Finance revenue     1,056.5           1,152.3           1,530.5    
Interest expense     (698.9 )         (703.7 )         (831.4 )  
Depreciation on operating lease equipment     (160.5 )         (166.6 )         (172.7 )  
Net finance revenue     197.1           282.0           526.4    
Other income     278.2           223.8           150.4    
Total net revenues   $ 475.3         $ 505.8         $ 676.8    
                       
Net Finance Revenue as a % of Average Earning Assets
    Quarters Ended
    March 31, 2011     December 31, 2010   March 31, 2010(3)
GAAP - net finance revenue   $ 197.1   2.24 %     $ 282.0   3.04 %     $ 526.4   4.67 %
FSA     (86.7 )

(1.13

%)

      (271.4 )

(2.94

%)

      (447.3 )

(4.07

%)

Secured debt prepayment penalty fee     35.0   0.35 %       48.9   0.46 %       15.0   0.11 %
Non-GAAP - adjusted net finance revenue   $ 145.4   1.46 %     $ 59.5   0.56 %     $ 94.1   0.71 %
                       
    March 31,       December 31,       March 31,  
Earning assets(2)   2011       2010       2010(3)  
Loans   $ 23,736.7         $ 24,500.5         $ 32,459.6    
Operating lease equipment, net     11,040.2           11,136.7           10,933.6    
Assets held for sale     1,174.4           1,218.5           1,368.8    
Credit balances of factoring clients     (1,110.7 )         (935.3 )         (881.1 )  
Total earning assets   $ 34,840.6         $ 35,920.4         $ 43,880.9    
                       
                       
(1) Total net revenues are combination of net finance revenues after depreciation on operating leases and other income.
 

(2) Earning assets reflect point in time balances. Average Earning Assets are computed for the respective period and utilized in certain revenue and expense ratios.

 
(3) Reflects previously restated balances as disclosed in the Company's December 31, 2010 Form 10-K.

 

Contact:

CIT MEDIA RELATIONS:
C. Curtis Ritter, 973-740-5390
Vice President - Director of External and Internal Communications & Media Relations
Curt.Ritter@cit.com
or
CIT INVESTOR RELATIONS:
Ken Brause, 212-771-9650
Executive Vice President
Ken.Brause@cit.com