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    CIT Announces Third Quarter 2018 Results
    Tuesday, October 23, 2018 06:30 AM

    NEW YORK, Oct. 23, 2018 /PRNewswire/ --

    CIT logo

    Highlights:

    • Third quarter net income available to common shareholders of $132 million or $1.15 per diluted common share; income from continuing operations available to common shareholders of $129 million or $1.13 per diluted common share

    • Excluding noteworthy items, third quarter income from continuing operations available to common shareholders1 of $131 million or $1.15 per diluted common share

    • Average loans and leases were essentially unchanged compared to the prior quarter and up 2% compared to the year-ago quarter. Average loans and leases in core portfolios2 grew 2% compared to the prior quarter and 8% compared to the year-ago quarter.
      • Funded volume increased to $3.1 billion, up 38% compared to the year-ago quarter

    • Completed repurchase of $291 million in common equity in 3Q18, consisting of approximately 5.5 million shares at an average price per share of $52.91
      • Completed the purchase of an additional $188 million in common equity through Oct. 22, consisting of 3.8 million shares at an average price of $49.63
      • $271 million remaining in current share repurchase authorization, most of which is expected to be completed by year-end
      • CET1 ratio of 12.3% at the end of the quarter remains above our target level

    • Completed the sale of our European railcar leasing business (NACCO) on October 4
      • Use of net proceeds of $1.1 billion to include liability management actions, including the termination of the TRS, and return of capital to shareholders under the current share repurchase authorization
      • Expected sale of approximately $350 million of railcar assets to CIT Bank to enable more efficient deposit-based funding

    CIT Group Inc. (NYSE: CIT) today reported third quarter net income available to common shareholders of $132 million or $1.15 per diluted common share, compared to net income available to common shareholders of $220 million or $1.61 per diluted common share for the year-ago quarter. Income from continuing operations available to common shareholders for the third quarter was $129 million or $1.13 per diluted common share, compared to income available to common shareholders of $223 million or $1.64 per diluted common share in the year-ago quarter.

    Income from continuing operations available to common shareholders excluding noteworthy items for the third quarter was $131 million or $1.15 per diluted common share, compared to $139 million or $1.02 per diluted common share in the year-ago quarter, as lower net finance revenue and an increase in the provision for credit losses were partially offset by higher other non-interest income and lower operating expenses. The increase in income from continuing operations excluding noteworthy items per diluted common share reflects the decline in the average number of diluted common shares outstanding due to significant share repurchases over the past four quarters.

    "In the third quarter, we delivered strong performance in all areas of our strategic plan," said CIT Chairwoman and Chief Executive Officer Ellen R. Alemany. "The average core loan and lease portfolio grew 8% year-over-year driven by strong originations as our strategic initiatives gained momentum. In addition, we made significant progress in reducing operating expenses, returning capital and driving greater funding efficiency through continued consumer deposit growth and the extension of debt maturities."

    Alemany continued, "In October, we completed the sale of the European rail business, which enabled us to initiate a series of liability management actions to further optimize our funding profile. Collectively, these efforts advance our plan to improve our return on tangible common equity."

    Return on Tangible Common Equity (ROTCE)3 for continuing operations was 9.66%. ROTCE for continuing operations excluding noteworthy items3 was 9.78%. Tangible book value per common share at September 30, 2018 was $50.02. The preliminary Common Equity Tier 1 Capital ratio decreased from the prior quarter and remained strong at 12.3%, and the preliminary Total Capital ratio decreased to 15.1% at September 30, 2018.

    Financial results for the third quarter in continuing operations included noteworthy items related to our strategic initiatives:

    • $16 million (after tax) ($0.14 per diluted common share) charge in other non-interest income from an impairment to the indemnification asset related to a loss share agreement on assets in our Legacy Consumer Mortgage (LCM) portfolio in the Consumer Banking segment.
    • $11 million (after tax) ($0.09 per diluted common share) benefit from a release of a valuation reserve in other non-interest income related to assets held for sale in China in the Non-strategic Portfolios (NSP) segment.
    • $6 million (after tax) ($0.05 per diluted common share) benefit in net finance revenue from the suspension of the depreciation of assets related to NACCO that were in assets held for sale.
    • $3 million (after tax) ($0.02 per diluted common share) in debt extinguishment costs related to the redemption of $500 million in unsecured senior debt.

    Selected Financial Highlights

    Select Financial Highlights*













    3Q18 change from



    ($ in millions)

    3Q18



    2Q18



    3Q17



    2Q18



    3Q17






























    Net finance revenue(1)

    $

    389



    $

    389



    $

    401



    $

    0



    0

    %



    $

    (11)



    -3

    %


    Non-interest income


    86




    135




    63




    (49)



    -36

    %




    23



    36

    %


    Total net revenue


    476




    524




    464




    (49)



    -9

    %




    12



    3

    %


    Non-interest expenses


    267




    287




    331




    (20)



    -7

    %




    (64)



    -19

    %


    Income from continuing operations before credit provision


    209




    238




    133




    (29)



    -12

    %




    76



    57

    %


    Provision for credit losses


    38




    33




    30




    5



    16

    %




    8



    27

    %


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


    171




    205




    103




    (34)



    -17

    %




    68



    66

    %


    Provision (benefit) for income taxes


    41




    57




    (120)




    (16)



    -28

    %




    161


    NM



    Income from continuing operations


    129




    147




    223




    (18)



    -12

    %




    (93)



    -42

    %


    (Loss) income from discontinued operations, net of taxes


    2




    (21)




    (3)




    23


    NM





    5


    NM



    Net income


    132




    127




    220




    5



    4

    %




    (88)



    -40

    %


    Preferred stock dividends


    -




    9




    -




    (9)



    -100

    %




    -


    NM



    Net income available to common shareholders

    $

    132



    $

    117



    $

    220



    $

    14



    12

    %



    $

    (88)



    -40

    %


    Income from continuing operations available to common shareholders

    $

    129



    $

    138



    $

    223



    $

    (9)



    -6

    %



    $

    (93)



    -42

    %






























    Per common share




























    Diluted income per common share

    $

    1.15



    $

    0.94



    $

    1.61



    $

    0.21







    $

    (0.46)






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

    $

    50.02



    $

    49.41



    $

    48.58



    $

    0.61







    $

    1.44






    Average diluted common shares outstanding (in thousands)


    114,007




    124,686




    136,126




    (10,679)








    (22,119)


































    Capital adequacy




























    CET1 Ratio(3)


    12.3

    %



    13.2

    %



    14.0

    %


    -90bps







    NM






    Total Capital Ratio(3)


    15.1

    %



    16.0

    %



    15.7

    %


    -90bps







    -60bps


































    Asset quality




























    Net charge-offs as a % of average loans


    0.35

    %



    0.21

    %



    0.58

    %


    14bps







    -23bps






    Allowance for loan losses as a % of loans


    1.57

    %



    1.59

    %



    1.47

    %


    -3bps







    9bps


































    Key performance metrics




























    Net finance margin(1)


    3.43

    %



    3.37

    %



    3.53

    %


    7bps







    -10bps






    Loans and leases to deposit ratio


    126

    %



    121

    %



    127

    %


    NM







    -89bps






    CIT Bank Loans and leases to deposit ratio


    101

    %



    96

    %



    102

    %


    NM







    NM






    Return on average common equity (available to common shareholders,
    continuing operations)


    8.62

    %



    8.48

    %



    12.74

    %


    14bps







    NM






    Return on tangible common equity (available to common shareholders,
    continuing operations)


    9.66

    %



    9.44

    %



    14.58

    %


    22bps







    NM






    Return on tangible common equity (available to common shareholders,
    continuing operations), excluding noteworthy items(2)


    9.78

    %



    8.56

    %



    9.20

    %


    NM







    58bps






    Return on AEA, applicable to common shareholders(1)


    1.16

    %



    1.02

    %



    1.93

    %


    14bps







    -77bps






    Return on AEA, excluding noteworthy items(1)(2)


    1.17

    %



    1.02

    %



    1.21

    %


    15bps







    -4bps






    Net efficiency ratio(1)


    54.1

    %



    49.9

    %



    57.8

    %


    NM







    NM






    Headcount


    3,757




    3,843




    3,966




    (86)








    (209)






























































    (1)See "Non-GAAP Measurements" at the end of this press release and beginning on page 26 for a reconciliation of non-GAAP to GAAP financial information and noteworthy items.

    (2)Excludes noteworthy items. See "Non-GAAP Measurements" at the end of this press release and beginning on page 26 for a reconciliation of non-GAAP to GAAP financial information and noteworthy items.

    (3)Ratios on fully phased-in basis.

    * Certain balances may not sum due to rounding.

    Unless otherwise indicated, all references below relate to continuing operations.

    Income Statement Highlights:
    Income from continuing operations available to common shareholders excluding noteworthy items4 was $131 million compared to $125 million in the prior quarter, primarily reflecting lower operating expense and income tax expense and no semi-annual preferred dividend paid in the current quarter, partially offset by a decline in other non-interest income and higher credit costs.

    Net Finance Revenue

    Net Finance Revenue*




    3Q18 change from



    ($ in millions)

    3Q18



    2Q18



    3Q17



    2Q18




    3Q17































    Interest income

    $

    474



    $

    474



    $

    454



    $

    -



    0

    %



    $

    20



    4

    %


    Rental income on operating leases


    264




    261




    252




    3



    1

    %




    12



    5

    %


    Depreciation on operating lease equipment


    78




    77




    71




    1



    1

    %




    7



    10

    %


    Maintenance and other operating lease expenses


    57




    64




    58




    (7)



    -11

    %




    (1)



    -2

    %


    Net rental income on operating leases


    130




    121




    123




    9



    8

    %




    6



    5

    %


    Interest expense


    214




    205




    177




    9



    4

    %




    37



    21

    %


    Net finance revenue

    $

    389



    $

    389



    $

    401



    $

    0



    0

    %



    $

    (11)



    -3

    %


    Average earning assets(1)

    $

    45,377



    $

    46,230



    $

    45,454



    $

    (853)



    -2

    %



    $

    (77)



    0

    %


    Net finance margin


    3.43

    %



    3.37

    %



    3.53

    %


    7bps







    -10bps






    Excluding Noteworthy Items(1)




























    Net finance revenue

    $

    381



    $

    380



    $

    393



    $

    0



    0

    %



    $

    (12)



    -3

    %


    Average earning assets

    $

    45,377



    $

    46,230



    $

    45,454



    $

    (853)



    -2

    %



    $

    (77)



    0

    %


    Net finance margin


    3.36

    %



    3.29

    %



    3.46

    %


    7bps







    -10bps


































    (1)See "Non-GAAP Measurements" at the end of this press release and beginning on page 26 for a reconciliation of non-GAAP to GAAP financial information and noteworthy items.



    * Certain balances may not sum due to rounding.



    Net finance revenue5 was $389 million, unchanged from the prior quarter. Net finance revenue in the current and prior quarters included a $9 million benefit from the suspension of depreciation expense related to NACCO because its assets were included in assets held for sale. Excluding noteworthy items, net finance revenue5 was $381 million, compared to $380 million in the prior quarter, as higher net operating lease income, driven by a lease prepayment and lower maintenance costs in Rail, were mostly offset by higher deposit costs.

    Net finance revenue as a percentage of average earning assets ("net finance margin5") excluding noteworthy items was 3.36%, a 7 bps increase from 3.29% in the prior quarter. The increase in net finance margin excluding noteworthy items reflects higher yields on commercial loans and an increase in rental income, partially offset by higher deposit costs and the full quarter impact of the sale of the reverse mortgage portfolio.

    Net finance revenue in the year-ago quarter included an $8 million benefit from the suspension of depreciation expense related to NACCO because its assets were included in assets held for sale. Excluding noteworthy items, net finance revenue decreased $12 million or 3% compared to the year-ago quarter. The decrease in net finance revenue primarily reflected higher funding costs and lower net purchase accounting accretion, partially offset by higher income on loans in the Commercial Banking segment and on investment securities.

    Net finance margin excluding noteworthy items decreased 10 bps compared to the year-ago quarter, reflecting the aforementioned drivers of the decrease in net finance revenue, partially offset by a shift in asset mix from interest-bearing deposits to higher yielding assets.

    Other Non-interest Income

    Other Non-Interest Income*




    3Q18 change from



    ($ in millions)

    3Q18



    2Q18



    3Q17



    2Q18




    3Q17































    Fee revenues

    $

    28



    $

    27



    $

    26



    $

    2



    6

    %



    $

    2



    8

    %


    Factoring commissions


    27




    24




    27




    4



    16

    %




    0



    1

    %


    Gains on leasing equipment, net of impairments


    14




    14




    12




    (1)



    -6

    %




    1



    12

    %


    Gains on investment securities, net of impairments


    4




    4




    10




    (0)



    -3

    %




    (7)



    -65

    %


    BOLI income


    7




    7




    2




    (0)



    -2

    %




    5


    NM



    Other revenues


    7




    61




    (14)




    (54)



    -88

    %




    21


    NM



    Total other non-interest income

    $

    86



    $

    135



    $

    63



    $

    (49)



    -36

    %



    $

    23



    36

    %






























    Total other non-interest income, excluding noteworthy
    items(1)

    $

    97



    $

    106



    $

    90



    $

    (9)



    -9

    %



    $

    7



    7

    %






























    (1)See "Non-GAAP Measurements" at the end of this press release and beginning on page 26 for a reconciliation of non-GAAP to GAAP financial information and noteworthy items.



    * Certain balances may not sum due to rounding.



    Other non-interest income was $86 million compared to $135 million in the prior quarter. Other non-interest income in the current quarter included aggregate noteworthy items of a $10 million net charge in other revenue from a $21 million impairment charge to the indemnification asset related to a loss share agreement on assets in our LCM portfolio in the Consumer Banking segment that was partially offset by an $11 million benefit from a release of a valuation reserve related to assets held for sale in China in the NSP segment. Other non-interest income in the prior quarter included aggregate noteworthy items of a $29 million benefit in other revenues related to the Financial Freedom transaction, primarily a gain on the sale of the reverse mortgage portfolio.

    Excluding noteworthy items, other non-interest income6 was $97 million, compared to $106 million in the prior quarter, which included income of $5 million related to the reverse mortgage portfolio in Consumer Banking that was sold in the prior quarter and a $6 million benefit from a release of reserves related to the OneWest acquisition. Factoring commissions increased $4 million from seasonally higher volumes, partially offset by a lower average commission rate. Fee income increased $2 million.

    Other non-interest income in the year-ago quarter included noteworthy items totaling $27 million in aggregate charges related to the Financial Freedom transaction, including a $5 million write-down of OREO, a $9 million impairment of reverse mortgage-related assets and a $12 million write down of reverse mortgage loans. Other non-interest income excluding noteworthy items increased by $7 million from the year-ago quarter reflecting higher income from bank-owned life insurance (BOLI).

    Operating Expenses

    Operating Expenses*




    3Q18 change from



    ($ in millions)

    3Q18



    2Q18



    3Q17



    2Q18




    3Q17































    Compensation and benefits

    $

    137



    $

    143



    $

    139



    $

    (6)



    -4

    %



    $

    (2)



    -1

    %


    Technology


    32




    33




    31




    (0)



    -1

    %




    2



    6

    %


    Professional fees


    17




    21




    32




    (4)



    -19

    %




    (15)



    -48

    %


    Insurance


    16




    19




    19




    (3)



    -14

    %




    (3)



    -14

    %


    Net occupancy expense


    16




    16




    16




    0



    1

    %




    0



    0

    %


    Advertising and marketing


    11




    13




    14




    (3)



    -21

    %




    (3)



    -22

    %


    Other expenses


    28




    17




    18




    11



    67

    %




    10



    55

    %


    Operating expenses, excluding restructuring costs and
    intangible asset amortization


    257




    262




    268




    (4)



    -2

    %




    (11)



    -4

    %


    Intangible asset amortization


    6




    6




    6




    0



    0

    %




    (0)



    -3

    %


    Restructuring costs


    0




    0




    3




    0


    NM





    (3)



    -100

    %


    Total operating expenses

    $

    263



    $

    268



    $

    277



    $

    (4)



    -2

    %



    $

    (14)



    -5

    %


    Net efficiency ratio(1)


    54.1

    %



    49.9

    %



    57.8

    %


    NM







    NM


































    Total operating expenses, excluding noteworthy items and
    intangible asset amortization(1)

    $

    257



    $

    262



    $

    268



    $

    (4)



    -2

    %



    $

    (11)



    -4

    %


    Net efficiency ratio, excluding noteworthy items and
    intangible asset amortization(1)


    53.9

    %



    53.8

    %



    55.5

    %


    12bps







    NM


































    (1)See "Non-GAAP Measurements" at the end of this press release and beginning on page 26 for a reconciliation of non-GAAP to GAAP financial information and noteworthy items.



    * Certain balances may not sum due to rounding.



    Operating expenses excluding noteworthy items and intangible asset amortization7 in the current quarter was $257 million, a decrease from $262 million in the prior quarter, driven primarily by decreases in employee costs and professional fees, partially offset by a $5 million reversal of a non-income tax-related reserve in the prior quarter.

    Operating expenses in the year-ago quarter included $3 million in restructuring charges. Compared to the year-ago quarter, operating expenses excluding noteworthy items and intangible asset amortization decreased $11 million or 4%, primarily reflecting lower professional fees, partially offset by higher other non-income tax expenses.

    The net efficiency ratio7 increased to 54% compared to 50% in the prior quarter. The net efficiency ratio excluding noteworthy items7 was 54%, unchanged from the prior quarter, as the decrease in other non-interest income was offset by the decrease in operating expenses. Compared to the year-ago quarter, the net efficiency ratio excluding noteworthy items improved from 56%, primarily due to the decrease in operating expenses and increase in other non-interest income, partially offset by the decrease in net finance revenue.

    Debt Extinguishment Costs
    We recognized $3 million in debt extinguishment costs associated with the redemption of $500 million of unsecured senior debt from the proceeds of the issuance of $500 million in unsecured senior debt earlier in the quarter. In the prior quarter, we recognized $19 million in debt extinguishment costs associated with the redemption of $883 million of unsecured senior debt from the proceeds of the issuance of $1 billion in unsecured senior debt in the first quarter 2018. In the year-ago quarter, we recognized $54 million in debt extinguishment costs associated with the repayment of $800 million of unsecured senior debt.

    Income Taxes
    The provision for income taxes in the current quarter of $41 million included an aggregate of $5 million in discrete tax benefits. The provision for income taxes in the prior quarter of $57 million included an aggregate of $2 million in discrete tax expense, and the benefit for income taxes in the year-ago quarter of $120 million included a $140 million deferred tax benefit from a restructuring of an international legal entity.

    The effective tax rate in the current quarter was 24%. Excluding discrete tax items and noteworthy items, the effective tax rate was 28% in the current quarter and 27% in the prior and year-ago quarters.

    Balance Sheet Highlights:
    Earning Assets

    Earning Assets*




    3Q18 change from



    ($ in millions)

    3Q18



    2Q18



    3Q17



    2Q18




    3Q17































    Loans (including assets held for sale)

    $

    30,700



    $

    29,517



    $

    29,632



    $

    1,183



    4

    %



    $

    1,068



    4

    %


    Operating lease equipment, net (including assets held for
    sale)


    8,065




    8,001




    7,760




    64



    1

    %




    306



    4

    %


    Loans and leases


    38,765




    37,518




    37,392




    1,247



    3

    %




    1,373



    4

    %


    Interest-bearing cash


    1,200




    3,267




    2,659




    (2,067)



    -63

    %




    (1,459)



    -55

    %


    Investment securities and securities purchased under
    agreement to resell


    6,540




    6,107




    5,745




    432



    7

    %




    795



    14

    %


    Indemnification asset


    27




    71




    172




    (44)



    -62

    %




    (145)



    -84

    %


    Credit balances of factoring clients


    (1,672)




    (1,431)




    (1,699)




    (242)



    -17

    %




    26



    2

    %


    Total earning assets(1)

    $

    44,859



    $

    45,533



    $

    44,269



    $

    (673)



    -1

    %



    $

    591



    1

    %


    Average earning assets(1)

    $

    45,377



    $

    46,230



    $

    45,454



    $

    (853)



    -2

    %



    $

    (77)



    0

    %






























    (1)See "Non-GAAP Measurements" at the end of this press release and beginning on page 26 for a reconciliation of non-GAAP to GAAP financial information and noteworthy items.



    * Certain balances may not sum due to rounding.



    Total earning assets decreased 1% compared to the prior quarter, primarily reflecting the deployment of interest-bearing cash into certain liability management and capital actions. Total earning assets increased 1% compared to the year-ago quarter, primarily reflecting growth in loans and leases, partially offset by a decrease in interest-bearing cash. Total loans and leases increased 3% from the prior quarter and 4% from the year-ago quarter, primarily reflecting the growth in commercial loans.

    Average earning assets decreased 2% from the prior quarter, primarily reflecting the deployment of interest-bearing cash into certain liability management and capital actions. Average earning assets compared to the year-ago quarter declined slightly, reflecting a decline in interest-bearing cash and run-off of legacy portfolios, partially offset by growth in the core portfolios and the investment portfolio.

    Average loans and leases were essentially unchanged in the quarter, as growth in Commercial Finance, North America Rail and Business Capital within the Commercial Banking segment and in Other Consumer Lending within the Consumer Banking segment was offset by the sale of the reverse mortgage portfolio and run-off of the LCM portfolio. Average loans and leases in the core portfolio grew by 2% compared to the prior quarter. Continued strong growth in funded volume across core divisions in both Commercial Banking and Consumer Banking was the key driver of core portfolio growth in the quarter. Average loans and leases in the core portfolio grew 8% compared to the year-ago quarter, driven by growth in Business Capital and Commercial Finance divisions of Commercial Banking and the Other Consumer Lending division of Consumer Banking.

    Cash and Investment Securities
    Interest-bearing cash and investment securities (including securities purchased under agreements to resell) were $7.7 billion at Sept. 30, 2018, and consisted of $1.2 billion of interest-bearing cash and $6.5 billion of investment securities. In addition, there was approximately $0.2 billion of non-interest-bearing cash.

    Of the interest-bearing cash and investment securities, $6.8 billion was at CIT Bank, N.A. (CIT Bank) and $0.6 billion was at the financial holding company, while the remaining $0.3 billion consisted of amounts held at the operating subsidiaries and restricted balances.

    Deposits and Borrowings

    Deposits and Borrowings*




    3Q18 change from



    ($ in millions)

    3Q18



    2Q18



    3Q17



    2Q18




    3Q17































    Noninterest-bearing checking

    $

    1,296



    $

    1,290



    $

    1,360



    $

    7



    1

    %



    $

    (64)



    -5

    %


    Interest-bearing checking


    1,768




    2,078




    2,658




    (310)



    -15

    %




    (890)



    -33

    %


    Other money markets/sweeps


    4,795




    4,976




    4,928




    (181)



    -4

    %




    (133)



    -3

    %


    Savings and online money market accounts


    8,268




    9,125




    5,892




    (858)



    -9

    %




    2,376



    40

    %


    Time deposits


    14,507




    13,537




    14,584




    970



    7

    %




    (77)



    -1

    %


    Other


    192




    175




    173




    17



    9

    %




    19



    11

    %


    Total deposits

    $

    30,825



    $

    31,181



    $

    29,595



    $

    (356)



    -1

    %



    $

    1,230



    4

    %


    Unsecured borrowings

    $

    4,238



    $

    4,238



    $

    3,748



    $

    (1)



    0

    %



    $

    490



    13

    %


    Secured borrowings


    4,437




    4,621




    4,783




    (185)



    -4

    %




    (347)



    -7

    %


    Total borrowings

    $

    8,674



    $

    8,860



    $

    8,531



    $

    (185)



    -2

    %



    $

    143



    2

    %






























    * Certain balances may not sum due to rounding.



    Deposits at Sept. 30, 2018 represented approximately 78% of CIT's funding, unchanged from June 30, 2018, as declines in savings and online money market accounts and interest-bearing checking accounts were offset by growth in time deposits in the online and retail channels. Average deposits increased by $275 million or 1% compared to the prior quarter, driven by growth in the consumer-based direct bank. The loans and leases-to-deposits ratio at CIT Bank was 101% at Sept. 30, 2018, compared to 96% at June 30, 2018. For CIT Group, the loans and leases-to-deposits ratio was 126% at Sept. 30, 2018, compared to 121% at June 30, 2018.

    The weighted average rate on average outstanding deposits in the current quarter increased 15 bps to 1.58% from 1.43% in the prior quarter. Compared to the year-ago quarter, the weighted average rate on average outstanding deposits increased 36 bps from 1.22%. The rate increases from the prior and year-ago quarter both primarily reflect increases in average savings accounts and time deposits in the online and retail channels, partially offset by a reduction in higher-cost brokered deposits.

    Unsecured borrowings comprised 11% of the funding mix at Sept. 30, 2018, unchanged from the level at June 30, 2018. During the quarter the $500 million in unsecured debt due in 2019 was redeemed with the proceeds of the issuance of $500 million in unsecured senior debt due in 2024.

    The weighted average coupon on our unsecured senior and subordinated debt was 5.05% at Sept. 30, 2018, with a weighted average maturity of approximately 4.9 years, compared to 4.95% at June 30, 2018, with a weighted average maturity of approximately 4.5 years.

    Secured borrowings decreased primarily due to a decrease in FHLB borrowings and comprised 11% of the funding mix at Sept. 30, 2018, compared to 11% at June 30, 2018. A portion of the net proceeds from the sale of NACCO, which closed in October 2018, will be used to terminate a Dutch subsidiary's total return swap facility (TRS) and redeem the railcar securitization that serves as the TRS's reference obligation, which will reduce total secured borrowings by approximately $465 million.

    Capital

    Capital*




    3Q18 change from



    ($ in millions, except per share data)

    3Q18



    2Q18



    3Q17



    2Q18




    3Q17































    Common stockholders' equity

    $

    5,995



    $

    6,201



    $

    7,126



    $

    (205)



    -3

    %



    $

    (1,131)



    -16

    %


    Tangible common equity

    $

    5,530



    $

    5,730



    $

    6,382



    $

    (200)



    -3

    %



    $

    (851)



    -13

    %


    Total risk-based capital(1)

    $

    6,824



    $

    6,980



    $

    7,087



    $

    (155)



    -2

    %



    $

    (262)



    -4

    %


    Risk-weighted assets(1)

    $

    45,296



    $

    43,676



    $

    45,124



    $

    1,619



    4

    %



    $

    172



    0

    %






























    Book value per common share (BVPS)

    $

    54.22



    $

    53.47



    $

    54.25



    $

    0.75



    1

    %



    $

    (0.03)



    0

    %


    Tangible book value per common share (TBVPS)

    $

    50.02



    $

    49.41



    $

    48.58



    $

    0.61



    1

    %



    $

    1.44



    3

    %


    CET1 ratio(1)


    12.3

    %



    13.2

    %



    14.0

    %


    -90bps







    NM






    Total capital ratio(1)


    15.1

    %



    16.0

    %



    15.7

    %


    -90bps







    -60bps






    Tier 1 leverage ratio(1)


    12.0

    %



    12.1

    %



    13.4

    %


    -10bps







    NM


































    (1)Balances and ratios on fully phased-in basis.



    * Certain balances may not sum due to rounding.



    Capital actions during the quarter included the repurchase of approximately 5.5 million common shares at an average share price of $52.91 and a quarterly cash dividend of $0.25 per common share. Subsequent to the end of the third quarter and through Oct. 22, we repurchased an additional approximately 3.8 million common shares at an average share price of $49.63. As a result, of the current $750 million share repurchase authorization, $271 million remains, most of which is expected to be completed by year-end.

    Common stockholders' equity decreased from the prior quarter, primarily driven by the capital returns, partially offset by net income in the current quarter. Tangible book value per common share increased in the quarter to $50.02, as retained earnings and the reduced share count were partially offset by share repurchases and unrealized losses on investments in other comprehensive income.

    Total common shares outstanding was 110.6 million at Sept. 30, 2018, down from 116.0 million at June 30, 2018 and 131.4 million at Sept. 30, 2017.

    The preliminary Common Equity Tier 1 Capital ratio decreased from the prior quarter and remained strong at 12.3%. Common Equity Tier 1 Capital decreased primarily from capital returns in the quarter, partially offset by earnings. Risk-weighted assets (RWA) increased primarily reflecting growth in our core portfolio, including a seasonal increase in the Commercial Services business. The preliminary Total Capital ratio also decreased from the prior quarter to 15.1%.

    On Oct. 15, 2018, the Board of Directors declared a quarterly cash dividend of $0.25 per common share on outstanding common stock. The dividend is payable on Nov. 27, 2018 to common shareholders of record as of Nov. 13, 2018.

    On Oct. 15, 2018, the Board of Directors declared a semi-annual dividend of $29.00 per share on outstanding preferred stock. The dividend is payable on Dec. 17, 2018, to preferred shareholders of record as of Nov. 30, 2018.

    Asset Quality

    Asset Quality*




    3Q18 change from



    ($ in millions)

    3Q18



    2Q18



    3Q17



    2Q18



    3Q17































    Net charge-offs (NCOs)

    $

    26



    $

    15



    $

    42



    $

    11



    70

    %



    $

    (16)



    -38

    %


    NCOs as a % of average loans


    0.35

    %



    0.21

    %



    0.58

    %


    14bps







    -23bps






    Non-accrual loans

    $

    318



    $

    292



    $

    265



    $

    27



    9

    %



    $

    54



    20

    %


    OREO

    $

    34



    $

    35



    $

    64



    $

    (1)



    -2

    %



    $

    (30)



    -47

    %


    Provision for credit losses

    $

    38



    $

    33



    $

    30



    $

    5



    16

    %



    $

    8



    27

    %


    Total portfolio allowance as a % of loans


    1.57

    %



    1.59

    %



    1.47

    %


    -3bps







    9bps


































    * Certain balances may not sum due to rounding.



    Provision
    The provision for credit losses was $38 million in the current quarter including $39 million related to the Commercial Banking segment, while the Consumer Banking segment had a $1 million reserve release. In the prior quarter, all of the $33 million provision for credit losses was related to the Commercial Banking segment. The increase in the provision for credit losses from the prior quarter was primarily driven by asset growth and an increase in charge-offs in the Commercial Banking segment.

    The provision for credit losses in the year-ago quarter was $30 million, which included a noteworthy item of a $15 million charge related to the transfer of the reverse mortgage portfolio to assets held for sale in Consumer Banking in connection with the Financial Freedom transaction. The increase in the provision for credit losses from the year-ago quarter was primarily driven by asset growth.

    Net Charge-offs
    Net charge-offs were $26 million (0.35% of average loans), compared to $15 million (0.21% of average loans) in the prior quarter and $42 million (0.58% of average loans) in the year-ago quarter. Net charge-offs in the year-ago quarter included a noteworthy item of $15 million for charge-offs related to the transfer of the reverse mortgage portfolio to assets held for sale. Excluding noteworthy items, net charge-offs in the year-ago quarter were $26 million (0.36% of average loans).

    Nearly all net charge-offs are in the Commercial Banking segment. Net charge-offs in the Commercial Banking segment were $25 million (0.42% of average loans), up from $15 million (0.25% of average loans) in the prior quarter and $22 million (0.39% of average loans) in the year-ago quarter.

    Loan Loss Allowance
    The allowance for loan losses was $477 million (1.57% of loans) at Sept. 30, 2018, compared to $467 million (1.59% of loans) at June 30, 2018 and $420 million (1.47% of loans) at Sept. 30, 2017.

    In the Commercial Banking segment, the allowance for loan losses was $450 million (1.87% of loans) at Sept. 30, 2018, compared to $438 million (1.90% of loans) at June 30, 2018 and $392 million (1.73% of loans) at Sept. 30, 2017.

    Purchase credit impaired (PCI) loans acquired as part of the OneWest acquisition are carried at a significant discount to the unpaid principal balance. At Sept. 30, 2018, PCI loans with an aggregate unpaid principal balance of $2.6 billion were carried at $1.8 billion, representing a 32% discount. The vast majority of the discount is related to our LCM portfolio in Consumer Banking.

    Non-accrual Loans
    Non-accrual loans were $318 million (1.04% of loans) compared to $292 million (0.99% of loans) in the prior quarter and $265 million (0.93% of loans) in the year-ago quarter.

    In Commercial Banking, non-accrual loans were $275 million (1.14% of loans), compared to $252 million (1.10% of loans) at June 30, 2018 and $241 million (1.06% of loans) at Sept. 30, 2017. The increases from the prior and year-ago quarters were primarily driven by an increase in the Commercial Finance division.

    In Consumer Banking, non-accrual loans were $35 million (0.55% of loans) at Sept. 30, 2018, compared to $29 million (0.46% of loans) at June 30, 2018, and $19 million (0.33% of loans) at Sept. 30, 2017. At Sept. 30, 2018, $29 million of the non-accrual loans were related to non-PCI loans in LCM. In the prior and year-ago quarters, essentially all non-accrual loans were in the LCM portfolio.

    Commercial Banking

    Earnings Summary*




    3Q18 change from



    ($ in millions)

    3Q18



    2Q18



    3Q17



    2Q18



    3Q17































    Interest income

    $

    339



    $

    330



    $

    309



    $

    8



    3

    %



    $

    30



    10

    %


    Rental income on operating leases


    264




    261




    252




    3



    1

    %




    12



    5

    %


    Interest expense


    190




    177




    131




    13



    8

    %




    59



    45

    %


    Depreciation on operating lease equipment


    78




    77




    71




    1



    1

    %




    7



    10

    %


    Maintenance and other operating lease expenses


    57




    64




    58




    (7)



    -11

    %




    (1)



    -2

    %


    Net finance revenue


    278




    274




    301




    4



    2

    %




    (23)



    -8

    %


    Other non-interest income


    76




    73




    71




    3



    5

    %




    6



    8

    %


    Provision for credit losses


    39




    33




    11




    6



    17

    %




    28


    NM



    Operating expenses


    172




    171




    169




    1



    1

    %




    4



    2

    %


    Income before income taxes

    $

    143



    $

    143



    $

    193



    $

    1



    1

    %



    $

    (49)



    -26

    %






























    Select Average Balances




























    Average loans(1)

    $

    22,018



    $

    21,724



    $

    20,978



    $

    294



    1

    %



    $

    1,040



    5

    %


    Average operating leases(1)

    $

    8,032



    $

    7,980



    $

    7,798



    $

    52



    1

    %



    $

    234



    3

    %


    Average earning assets(2)

    $

    30,319



    $

    29,965



    $

    29,011



    $

    354



    1

    %



    $

    1,308



    5

    %






























    Key Metrics




























    Pre-tax ROAEA


    1.89

    %



    1.90

    %



    2.66

    %


    -1bps







    -77bps






    Net finance margin


    3.67

    %



    3.66

    %



    4.16

    %


    1bps







    -49bps






    New business volume

    $

    2,770



    $

    2,379



    $

    2,044



    $

    392



    16

    %



    $

    726



    36

    %


    Net efficiency ratio


    48.2

    %



    49.0

    %



    44.9

    %


    -82bps







    NM


































    (1)Amounts include held for sale. Average loans also is net of credit balances of factoring clients.



    (2)AEA is net of credit balances of factoring clients.



    * Certain balances may not sum due to rounding.



    Segment Financial Results
    Pre-tax earnings in the Commercial Banking segment in the current, prior and year-ago quarters included a benefit from the suspension of depreciation expense related to NACCO of $9 million, $9 million and $8 million, respectively. Excluding noteworthy items, pre-tax earnings was $135 million compared to $134 million in the prior quarter, as increases in net finance revenue and other non-interest income were mostly offset by an increase in the credit provision. Compared to the year-ago quarter, pre-tax earnings excluding noteworthy items decreased from $185 million, primarily driven by a decline in net finance revenue and an increase in the credit provision.

    Net Finance Revenue and Margin
    Excluding the noteworthy items, net finance revenue increased $4 million from the prior quarter. The increase was primarily driven by an increase in interest income from higher interest rates on floating rate earning assets, asset growth and a lease prepayment in the Rail division, partially offset by higher interest expense. Compared to the year-ago quarter, excluding noteworthy items, net finance revenue decreased $24 million, primarily due to higher interest expense and lower purchase accounting accretion, which were partially offset by the net benefit of higher interest rates on earning assets and asset growth. Purchase accounting accretion in the Commercial Banking segment was $8 million in the current quarter and continued to trend down.

    Net finance margin was essentially unchanged compared to the prior quarter as net finance revenue and average earning assets increased at a similar pace. Net finance margin decreased compared to the year-ago quarter from the aforementioned decreases in net finance revenue while average earning assets grew by 5%.

    Loans and Leases
    Average loans and leases, which comprise the vast majority of average earning assets, was $30.0 billion, up 1% from the prior quarter, driven by growth in Business Capital, Commercial Finance and North America Rail.

    New lending and leasing volume in the current quarter was $2.8 billion, representing a 16% increase compared to the prior quarter, primarily driven by strong origination growth in Commercial Finance and Real Estate Finance. Funded volumes in Business Capital remained strong in the quarter. Compared to the year-ago quarter, new lending and leasing volume increased 36%, with strong growth in Commercial Finance and Business Capital.

    Factoring volume of $8.0 billion was up 20% from the prior quarter, primarily driven by increased volume in the technology industry and seasonality. Compared to the year-ago quarter, factoring volume was up 11% driven primarily by increased volume in the technology industry.

    Commercial Banking Division Highlights
    Commercial Finance

    • Average loans and leases increased 2% compared to the prior quarter and increased 7% compared to the year-ago quarter from strong funded volume.
    • Gross yields increased 12 basis points from the prior quarter, primarily driven by higher interest rates partially offset by lower purchase accounting accretion.

    Rail

    • Average loans and leases of $7.6 billion included approximately $1.2 billion in assets held for sale related to NACCO that were sold on Oct. 4, 2018.
    • North America railcar utilization held steady at 98%.
    • Gross yields improved 6 basis points from the prior quarter due to a customer lease prepayment.

    Real Estate Finance

    • Average loans and leases decreased 1% compared to the prior quarter, although funded volume increased 42% and the prepayment rate slowed. Total loans and leases increased 4% compared to the prior quarter.
    • Gross yields increased 2 basis points from the prior quarter, as the benefit from higher interest rates was offset by lower prepayment fees.

    Business Capital

    • Average loans and leases increased 3% compared to the prior quarter and 10% compared to the year-ago quarter.
    • Gross yields were essentially flat compared to the prior quarter.

    Consumer Banking

    Earnings Summary*




    3Q18 change from



    ($ in millions)

    3Q18



    2Q18



    3Q17



    2Q18



    3Q17































    Interest income

    $

    79



    $

    85



    $

    92



    $

    (6)



    -7

    %



    $

    (13)



    -14

    %


    Interest benefit


    (42)




    (37)




    (16)




    (4)



    -12

    %




    (26)


    NM



    Net finance revenue


    121




    122




    108




    (2)



    -1

    %




    12



    11

    %


    Other non-interest income


    (18)




    38




    (23)




    (56)


    NM





    5



    20

    %


    Provision for credit losses


    (1)




    (0)




    19




    (1)


    NM





    (20)


    NM



    Operating expenses


    89




    94




    106




    (5)



    -5

    %




    (17)



    -16

    %


    Income (loss) before income taxes

    $

    15



    $

    66



    $

    (40)



    $

    (52)



    -78

    %



    $

    54


    NM































    Select Average Balances




























    Average loans(1)

    $

    6,364



    $

    6,787



    $

    6,711



    $

    (423)



    -6

    %



    $

    (347)



    -5

    %


    Average earning assets

    $

    6,433



    $

    6,897



    $

    6,904



    $

    (464)



    -7

    %



    $

    (471)



    -7

    %






























    Key Metrics




























    Pre-tax ROAEA


    0.90

    %



    3.85

    %



    -2.30

    %


    NM







    NM






    Net finance margin


    7.50

    %



    7.09

    %



    6.27

    %


    41bps







    NM






    New business volume

    $

    360



    $

    483



    $

    223



    $

    (123)



    -25

    %



    $

    137



    61

    %


    Net efficiency ratio


    82.2

    %



    55.8

    %



    118.9

    %



    26.4

    %







    -36.7

    %

































    (1)Amounts include held for sale.



    * Certain balances may not sum due to rounding.



    Segment Financial Results
    Pre-tax earnings in the Consumer Banking segment in the current quarter included a $21 million charge in other non-interest income related to an impairment charge to the indemnification asset related to amounts deemed uncollectable for the remaining indemnification period under the loss share agreement, which expires in March 2019, for covered loans in our LCM portfolio. Pre-tax earnings in the prior quarter included $29 million in other revenues related to the Financial Freedom transaction, primarily a gain on sale of the reverse mortgage portfolio. Excluding these noteworthy items, pre-tax earnings was $36 million compared to $37 million in the prior quarter, as decreases in interest income and other non-interest income related to the reverse mortgage portfolio that was sold in the prior quarter was mostly offset by a decline in operating expenses and an increase in the benefit in interest expense received from the other segments for the value of the excess deposits Consumer Banking generates. Compared to the year-ago quarter, pre-tax earnings excluding noteworthy items increased by $33 million, primarily from an increase in the benefit in interest expense received from the other segments for the value of the excess deposits Consumer Banking generates, lower operating expenses and an improvement in the credit provision, partially offset by a decline in interest income in the LCM portfolio from both run-off and the sale of the reverse mortgage portfolio.

    Net Finance Revenue and Margin
    Net finance revenue of $121 million decreased slightly from the prior quarter primarily due to lower interest income from run-off of the LCM portfolio and the sale of the reverse mortgage portfolio offset by an increase in the benefit in interest expense received from the other segments for the value of the excess deposits Consumer Banking generates. Net finance revenue increased by $12 million compared to the year-ago quarter, as the benefit in interest expense received from the other segments for the value of the excess deposits generated by Consumer Banking was partially offset by lower interest income from run-off of the LCM portfolio and the sale of the reverse mortgage portfolio.

    Average Loans
    Average loans, including loans held for sale, decreased compared to the prior and year-ago quarter, as run-off of the LCM portfolio and the sale of the reverse mortgage portfolio were partially offset by new business volume in the Other Consumer Banking division. Average loan growth in Other Consumer Banking was primarily driven by increases in residential mortgage lending in the retail and correspondent origination channels and closed loan purchases. The LCM portfolio made up $3.0 billion of the balance as of Sept. 30, 2018, down from $3.7 billion at June 30, 2018, due to the closing of the sale of the reverse mortgages portfolio during the prior quarter and continued run-off of the LCM portfolio. A significant portion of the LCM portfolio is covered by a loss sharing agreement with the FDIC. The benefit of the loss share agreement is recorded within the indemnification asset.

    Non-Strategic Portfolios (NSP):

    Earnings Summary*




    3Q18 change from



    ($ in millions)

    3Q18



    2Q18



    3Q17



    2Q18




    3Q17































    Interest income

    $

    1



    $

    2



    $

    5



    $

    (0)



    -26

    %



    $

    (3)



    -70

    %


    Interest expense


    1




    2




    3




    (1)



    -56

    %




    (2)



    -73

    %


    Net finance revenue


    1




    0




    2




    1


    NM





    (1)



    -63

    %


    Other non-interest income


    12




    1




    5




    11


    NM





    7


    NM



    Operating expenses and loss on debt extinguishment and
    deposit redemption


    2




    2




    9




    0



    0

    %




    (7)



    -76

    %


    Income (loss) before income taxes

    $

    10



    $

    (1)



    $

    (3)



    $

    11


    NM




    $

    13


    NM































    Select Average Balances




























    Average earning assets

    $

    79



    $

    123



    $

    227



    $

    (44)



    -36

    %



    $

    (148)



    -65

    %






























    Key Metrics




























    Pre-tax ROAEA


    50.89

    %



    -4.55

    %



    -4.76

    %


    NM







    NM






























































    * Certain balances may not sum due to rounding.



    Pre-tax income in the current quarter included $11 million in other income from a release of a valuation reserve related to an increase in fair value of certain assets held for sale in China.

    Assets held for sale at Sept. 30, 2018 was $32 million, which was all related to our business in China. Interest income continues to decline as earning assets continue to run off.

    Corporate & Other:

    Earnings Summary*




    3Q18 change from



    ($ in millions)

    3Q18



    2Q18



    3Q17



    2Q18




    3Q17































    Interest income

    $

    54



    $

    56



    $

    48



    $

    (2)



    -4

    %



    $

    7



    14

    %


    Interest expense


    64




    64




    58




    1



    1

    %




    6



    10

    %


    Net finance revenue


    (10)




    (7)




    (11)




    (3)



    -36

    %




    1



    5

    %


    Other non-interest income


    16




    24




    10




    (8)



    -32

    %




    6



    60

    %


    Operating expenses and loss on debt extinguishment and
    deposit redemption


    3




    20




    47




    (16)



    -83

    %




    (43)



    -93

    %


    Income (loss) before income taxes

    $

    3



    $

    (3)



    $

    (47)



    $

    6


    NM




    $

    50


    NM































    Select Average Balances




























    Average earning assets

    $

    8,546



    $

    9,245



    $

    9,312



    $

    (699)



    -8

    %



    $

    (766)



    -8

    %






























    Key Metrics




























    Pre-tax ROAEA


    0.13

    %



    -0.12

    %



    -2.03

    %


    25bps







    NM






























































    * Certain balances may not sum due to rounding.



    Certain items are not allocated to operating segments and are included in Corporate & Other, including interest expense related to corporate liquidity, mark-to-market on certain derivatives, BOLI income, restructuring charges, certain legal costs and other operating expenses. In addition, certain costs associated with debt redemptions are maintained at Corporate.

    Pre-tax income in Corporate & Other was $3 million, compared to pre-tax losses of $3 million in the prior quarter and $47 million in the year-ago quarter. Pre-tax results in the current, prior and year-ago quarters included debt extinguishment costs of $3 million, $19 million and $54 million, respectively. The year-ago quarter also included a $3 million restructuring charge in operating expenses.

    Discontinued Operations:
    Discontinued operations in the third quarter consisted of our Business Air portfolio. The sale of the Financial Freedom reverse mortgage servicing business was completed in the second quarter of 2018.

    Income in the current quarter from Discontinued Operations was $2 million. The prior quarter loss, excluding $19 million of noteworthy items from indemnification reserves and transaction costs related to the Financial Freedom sale, was $7 million. The year-ago quarter loss, excluding a $4 million noteworthy item from impairments related to Financial Freedom, was $1 million.

    Business Air loans and leases totaled $111 million at Sept. 30, 2018, down from $134 million at June 30, 2018 and $218 million at Sept. 30, 2017.

    Although the economic benefit and risk of the Financial Freedom reverse mortgage servicing business has been transferred to the buyer, certain assets and liabilities of the Financial Freedom servicing business will remain in discontinued operations until the required investor consent is received. At Sept. 30, 2018, Financial Freedom loans totaled $212 million and related secured borrowings totaled $213 million.

    Conference Call and Webcast
    The Company will host a conference call today, Oct. 23, 2018, to discuss its third quarter 2018 results. All interested parties are welcome to participate. An investor presentation will accompany the conference call and be available prior to the start of the conference call at the Investor Relations page of CIT's website at cit.com/investor under Presentations & Events.

    Conference call details:

    Time:

    8:00 am (Eastern Time)

    Dial-in:

    (888) 317-6003 for U.S. callers


    (866) 284-3684 for Canadian callers


    (412) 317-6061 for international callers


    Conference ID 7435310

    The conference call will also be webcast, which can be accessed from the Investor Relations page of CIT's website at cit.com/investor under Presentations & Events.

    A replay of the conference call will be available beginning shortly after the end of the call through Dec. 1, 2018, by dialing (877) 344-7529 for U.S. callers, (855) 669-9658 for Canadian callers or (412) 317-0088 for international callers and using conference ID 10124989, or at cit.com/investor under Presentations & Events.

    About CIT
    Founded in 1908, CIT (NYSE: CIT) is a financial holding company with approximately $50 billion in assets as of Sept. 30, 2018. Its principal bank subsidiary, CIT Bank, N.A., (Member FDIC, Equal Housing Lender) has more than $30 billion of deposits and more than $40 billion of assets. CIT provides financing, leasing, and advisory services principally to middle-market companies and small businesses across a wide variety of industries. It also offers products and services to consumers through its Internet bank franchise and a network of retail branches in Southern California, operating as OneWest Bank, a division of CIT Bank, N.A. For more information, visit cit.com.

    Forward-Looking Statements
    This press release contains forward-looking statements within the meaning of applicable federal securities laws that are based upon our current expectations and assumptions concerning future events, which are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. The words "expect," "anticipate," "estimate," "forecast," "initiative," "objective," "plan," "goal," "project," "outlook," "priorities," "target," "intend," "evaluate," "pursue," "commence," "seek," "may," "would," "could," "should," "believe," "potential," "continue," or the negative of any of those words or similar expressions is intended to identify forward-looking statements. All statements contained in this press release, other than statements of historical fact, including without limitation, statements about our plans, strategies, prospects and expectations regarding future events and our financial performance, are forward-looking statements that involve certain risks and uncertainties. While these statements represent our current judgment on what the future may hold, and we believe these judgments are reasonable, these statements are not guarantees of any events or financial results, and our actual results may differ materially. Important factors that could cause our actual results to be materially different from our expectations include, among others, the risk that (i) CIT is unsuccessful in implementing its strategy and business plan, (ii) CIT is unable to react to and address key business and regulatory issues, (iii) CIT is unable to achieve the projected revenue growth from its new business initiatives or the projected expense reductions from efficiency improvements, (iv) CIT is unable to achieve the projected gains from the sale of one or more of its businesses or assets, (v) CIT becomes subject to liquidity constraints and higher funding costs, or (v) the parties to a transaction do not receive or satisfy regulatory or other approvals and conditions on a timely basis or approvals are subject to conditions that are not anticipated.  We describe these and other risks that could affect our results in Item 1A, "Risk Factors," of our latest Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the Securities and Exchange Commission. Information regarding CIT's capital ratios consists of preliminary estimates. These estimates are forward-looking statements and are subject to change, possibly materially, as CIT completes its financial statements. Accordingly, you should not place undue reliance on the forward-looking statements contained in this press release. These forward-looking statements speak only as of the date on which the statements were made. CIT undertakes no obligation to update publicly or otherwise revise any forward-looking statements, except where expressly required by law.

    Non-GAAP Measurements
    Net finance revenue, net operating lease revenue and average earning assets are non-GAAP measurements used by management to gauge portfolio performance. Operating expenses excluding restructuring costs and intangible amortization is a non-GAAP measurement used by management to compare period over period expenses. Net efficiency ratio measures operating expenses (net of restructuring costs and intangible amortization) to our level of total net revenues.  Total assets from continuing operations is a non-GAAP measurement used by management to analyze the total asset change on a more consistent basis. Tangible book value and tangible book value per common share are non-GAAP metrics used to analyze banks. Net income excluding noteworthy items, income from continuing operations excluding noteworthy items, and Return of Tangible Common Equity excluding noteworthy items are non-GAAP measures used by management. The Company believes that adjusting for these items provides a measure of the underlying performance of the Company and of continuing operations.

    _________________________

    1 Income from continuing operations excluding noteworthy items is a non-GAAP measure. See "Non-GAAP Measurements" at the end of this press release and starting on page 26 for reconciliation of non-GAAP to GAAP financial information.
    2 Core portfolios is net of credit balances of factoring clients, NACCO assets held for sale, legacy consumer mortgages (LCM) and non-strategic portfolios (NSP).
    3 ROTCE and ROTCE excluding noteworthy items are non-GAAP measures. See "Non-GAAP Measurements" at the end of this press release and starting on page 26 for reconciliation of non-GAAP to GAAP financial information.
    4 Income from continuing operations available to common shareholders excluding noteworthy items is a non-GAAP measure. See "Non-GAAP Measurements" at the end of this press release and starting on page 26 for reconciliation of non-GAAP to GAAP financial information.
    5 Net finance revenue, net finance revenue excluding noteworthy items, net finance margin and net finance margin excluding noteworthy items are non-GAAP measures. See "Non-GAAP Measurements" at the end of this press release and starting on page 26 for reconciliation of non-GAAP to GAAP financial information.
    6 Other non-interest income excluding noteworthy items is a non-GAAP measure. See "Non-GAAP Measurements" at the end of this press release and starting on page 26 for reconciliation of non-GAAP to GAAP financial information.
    7 Operating expenses excluding noteworthy items and intangible asset amortization, net efficiency ratio and net efficiency ratio excluding noteworthy items and intangible asset amortization are non-GAAP measures. See "Non-GAAP Measurements" at the end of this press release and starting on page 26 for reconciliation of non-GAAP to GAAP financial information.

     


    CIT MEDIA RELATIONS:

    CIT INVESTOR RELATIONS:

    Gina Proia

    Barbara Callahan

    (212) 771-6008

    Gina.Proia@cit.com

    (973) 740-5058

    Barbara.Callahan@cit.com 

     

     

    CIT GROUP INC. AND SUBSIDIARIES


    Unaudited Consolidated Statements of Income


    (dollars in millions, except per share data)























    Quarters Ended



    Nine Months Ended



    September 30,



    June 30,



    September 30,



    September 30,



    2018



    2018



    2017



    2018



    2017


    Interest income




















    Interest and fees on loans

    $

    417.4



    $

    415.5



    $

    403.5



    $

    1,233.8



    $

    1,236.9


    Other interest and dividends


    56.2




    58.1




    50.5




    164.6




    151.0


    Total interest income


    473.6




    473.6




    454.0




    1,398.4




    1,387.9


    Interest expense




















    Interest on borrowings


    90.8




    94.6




    84.1




    268.8




    267.8


    Interest on deposits


    123.1




    110.6




    92.6




    330.8




    281.2


    Total interest expense


    213.9




    205.2




    176.7




    599.6




    549.0


    Net interest revenue


    259.7




    268.4




    277.3




    798.8




    838.9


    Provision for credit losses


    38.1




    32.9




    30.1




    139.8




    84.2


    Net interest revenue, after credit provision


    221.6




    235.5




    247.2




    659.0




    754.7


    Non-interest income




















    Rental income on operating lease equipment


    264.3




    261.3




    252.3




    779.2




    754.8


    Other non-interest income(1)


    86.2




    135.4




    63.3




    326.3




    227.0


    Total non-interest income


    350.5




    396.7




    315.6




    1,105.5




    981.8


    Non-interest expenses




















    Depreciation on operating lease equipment


    78.0




    77.2




    71.1




    231.6




    222.0


    Maintenance and other operating lease expenses


    56.6




    63.5




    57.9




    177.5




    165.0


    Operating expenses(2)


    263.3




    267.5




    277.3




    812.1




    884.5


    Loss on debt extinguishment and deposit redemption


    3.5




    19.3




    53.5




    22.9




    218.3


    Total non-interest expenses


    401.4




    427.5




    459.8




    1,244.1




    1,489.8


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


    170.7




    204.7




    103.0




    520.4




    246.7


    Provision (benefit) for income taxes


    41.3




    57.4




    (119.8)




    140.0




    (95.5)


    Income from continuing operations


    129.4




    147.3




    222.8




    380.4




    342.2






















    Discontinued operations




















    Income (loss) from discontinued operations, net of taxes


    2.1




    (4.2)




    (1.9)




    (8.8)




    95.4


    (Loss) gain on sale of discontinued operations, net of taxes


    -




    (16.3)




    (1.3)




    (16.3)




    118.6


    Income (loss) from discontinued operations, net of taxes


    2.1




    (20.5)




    (3.2)




    (25.1)




    214.0






















    Net income

    $

    131.5



    $

    126.8



    $

    219.6



    $

    355.3



    $

    556.2


    Less: preferred stock dividends


    -




    9.4




    -




    9.4




    -


    Net income available to common shareholders

    $

    131.5



    $

    117.4



    $

    219.6



    $

    345.9



    $

    556.2


    Income from continuing operations available to common shareholders

    $

    129.4



    $

    137.9



    $

    222.8



    $

    371.0



    $

    342.2






















    Basic income (loss) per common share




















    Income from continuing operations

    $

    1.15



    $

    1.12



    $

    1.66



    $

    3.04



    $

    1.98


    Income (loss) from discontinued operations, net of taxes


    0.02




    (0.17)




    (0.02)




    (0.21)




    1.24


    Basic income per common share

    $

    1.17



    $

    0.95



    $

    1.64



    $

    2.83



    $

    3.22


    Average number of common shares - basic (thousands)


    112,842




    123,499




    133,916




    122,185




    172,682






















    Diluted income (loss) per common share




















    Income (loss) from continuing operations

    $

    1.13



    $

    1.11



    $

    1.64



    $

    3.01



    $

    1.96


    Income (loss) from discontinued operations, net of taxes


    0.02




    (0.17)




    (0.03)




    (0.21)




    1.23


    Diluted income per common share

    $

    1.15



    $

    0.94



    $

    1.61



    $

    2.80



    $

    3.19


    Average number of common shares - diluted (thousands)


    114,007




    124,686




    136,126




    123,338




    174,201






























































    (1) OTHER NON-INTEREST INCOME




















    Fee revenues

    $

    28.2



    $

    26.5



    $

    26.2



    $

    81.9



    $

    83.3


    Factoring commissions


    27.2




    23.5




    27.0




    76.3




    76.2


    Gains on leasing equipment, net of impairments


    13.6




    14.4




    12.2




    41.5




    34.0


    BOLI income


    6.5




    6.6




    1.8




    19.6




    1.8


    Gains on investment securities, net of impairments


    3.6




    3.7




    10.4




    10.6




    17.5


    Other revenues


    7.1




    60.7




    (14.3)




    96.4




    14.2


    Total other non-interest income

    $

    86.2



    $

    135.4



    $

    63.3



    $

    326.3



    $

    227.0






















    (2) OPERATING EXPENSES




















    Compensation and benefits

    $

    137.3



    $

    143.2



    $

    139.0



    $

    428.3



    $

    427.7


    Technology


    32.3




    32.7




    30.6




    97.4




    97.2


    Professional fees


    16.7




    20.7




    32.1




    63.2




    103.5


    Insurance


    15.9




    18.5




    18.5




    54.3




    69.0


    Net occupancy expense


    16.1




    16.0




    16.1




    48.3




    51.1


    Advertising and marketing


    10.6




    13.4




    13.6




    37.0




    29.4


    Other expenses


    28.4




    17.0




    18.3




    65.6




    66.9


    Operating expenses, excluding restructuring costs and intangible asset
    amortization


    257.3




    261.5




    268.2




    794.1




    844.8


    Intangible asset amortization


    6.0




    6.0




    6.2




    18.0




    18.6


    Restructuring costs


    -




    -




    2.9




    -




    21.1


    Total operating expenses

    $

    263.3



    $

    267.5



    $

    277.3



    $

    812.1



    $

    884.5


     

     

    CIT GROUP INC. AND SUBSIDIARIES


    Unaudited Consolidated Balance Sheets


    (dollars in millions, except per share data)



















    September 30,



    June 30,



    December 31,



    September 30,



    2018



    2018



    2017



    2017


















    Assets
















    Total cash and deposits

    $

    1,367.5



    $

    3,475.6



    $

    1,718.7



    $

    3,112.3


    Securities purchased under agreement to resell


    200.0




    200.0




    150.0




    -


    Investment securities


    6,339.5




    5,907.4




    6,469.9




    5,744.8


    Assets held for sale


    1,380.5




    1,335.8




    2,263.1




    2,162.0


    Loans


    30,495.8




    29,348.4




    29,113.9




    28,505.3


    Allowance for loan losses


    (477.4)




    (467.3)




    (431.1)




    (419.5)


    Loans, net of allowance for loan losses


    30,018.4




    28,881.1




    28,682.8




    28,085.8


    Operating lease equipment, net


    6,888.7




    6,833.9




    6,738.9




    6,724.2


    Goodwill


    369.9




    369.9




    369.9




    625.5


    Bank owned life insurance


    808.2




    801.7




    788.6




    651.8


    Other assets*


    1,562.0




    1,667.2




    1,595.5




    1,667.1


    Assets of discontinued operations


    327.7




    382.4




    501.3




    562.0


    Total assets

    $

    49,262.4



    $

    49,855.0



    $

    49,278.7



    $

    49,335.5


















    Liabilities
















    Deposits

    $

    30,825.0



    $

    31,181.2



    $

    29,569.3



    $

    29,594.7


    Credit balances of factoring clients


    1,672.4




    1,430.8




    1,468.6




    1,698.5


    Other liabilities**


    1,461.9




    1,506.8




    1,437.1




    1,496.1


    Borrowings
















    Senior unsecured


    3,842.3




    3,843.2




    3,737.5




    3,748.0


    Structured financings


    1,286.6




    1,321.2




    1,541.4




    1,637.7


    FHLB advances


    3,150.0




    3,300.0




    3,695.5




    3,145.5


    Subordinated debt


    395.3




    395.2




    -




    -


    Total borrowings


    8,674.2




    8,859.6




    8,974.4




    8,531.2


    Liabilities of discontinued operations


    308.6




    350.9




    509.3




    563.7


    Total liabilities


    42,942.1




    43,329.3




    41,958.7




    41,884.2


    Equity
















    Stockholders' equity
















    Preferred stock


    325.0




    325.0




    325.0




    325.0


    Common stock


    2.1




    2.1




    2.1




    2.1


    Paid-in capital


    8,831.3




    8,822.0




    8,798.1




    8,787.1


    Retained earnings


    2,182.3




    2,079.4




    1,906.5




    2,025.8


    Accumulated other comprehensive loss


    (199.4)




    (176.1)




    (86.5)




    (73.3)


    Treasury stock, at cost


    (4,821.0)




    (4,526.7)




    (3,625.2)




    (3,615.4)


    Total common stockholders' equity


    5,995.3




    6,200.7




    6,995.0




    7,126.3


    Total equity


    6,320.3




    6,525.7




    7,320.0




    7,451.3


    Total liabilities and equity

    $

    49,262.4



    $

    49,855.0



    $

    49,278.7



    $

    49,335.5


















    Book Value Per Common Share
















    Book value per common share

    $

    54.22



    $

    53.47



    $

    53.25



    $

    54.25


    Tangible book value per common share

    $

    50.02



    $

    49.41



    $

    49.58



    $

    48.58


    Outstanding common shares (in thousands)


    110,566




    115,968




    131,353




    131,371


















































    *OTHER ASSETS
















    Tax credit investments and investments in unconsolidated subsidiaries

    $

    308.6



    $

    249.6



    $

    247.6



    $

    265.6


    Counterparty receivables


    202.0




    195.0




    241.3




    263.8


    Current and deferred federal and state tax assets


    183.8




    191.1




    205.2




    195.4


    Property, furniture and fixtures


    170.8




    172.9




    173.9




    178.9


    Intangible assets


    95.0




    101.0




    113.0




    119.1


    Indemnification assets


    27.2




    70.8




    142.4




    171.8


    Other


    574.6




    686.8




    472.1




    472.5


    Total other assets

    $

    1,562.0



    $

    1,667.2



    $

    1,595.5



    $

    1,667.1


















    **OTHER LIABILITIES
















    Accrued expenses and accounts payable

    $

    576.4



    $

    594.6



    $

    584.8



    $

    530.9


    Current and deferred taxes payable


    229.5




    216.5




    204.3




    229.7


    Fair value of derivative financial instruments


    129.1




    104.1




    87.5




    80.2


    Accrued interest payable


    59.4




    94.9




    86.6




    59.8


    Other


    467.5




    496.7




    473.9




    595.5


    Total other liabilities

    $

    1,461.9



    $

    1,506.8



    $

    1,437.1



    $

    1,496.1


     

     

    CIT GROUP INC. AND SUBSIDIARIES


    Average Balances and Rates


    (dollars in millions)



























    Quarters Ended



    September 30, 2018



    June 30, 2018



    September 30, 2017



    Average







    Average







    Average







    Balance



    Rate



    Balance



    Rate



    Balance



    Rate


    Assets
























    Interest-bearing deposits

    $

    2,466.4




    1.90

    %


    $

    3,530.8




    1.81

    %


    $

    3,873.9




    1.29

    %

    Investment securities and securities purchased under agreement to resell


    6,415.7




    2.77

    %



    6,062.8




    2.78

    %



    5,796.3




    2.62

    %

    Loans and loans held for sale (net of credit balances of factoring clients)


    28,408.7




    6.02

    %



    28,553.9




    6.00

    %



    27,793.1




    6.00

    %

    Total interest earning assets


    37,290.8




    5.19

    %



    38,147.5




    5.10

    %



    37,463.3




    4.99

    %

    Operating lease equipment, net (including held for sale)


    8,031.8




    6.46

    %



    7,980.3




    6.04

    %



    7,797.6




    6.33

    %

    Indemnification assets


    54.5




    -74.86

    %



    101.8




    -49.12

    %



    193.3




    -28.14

    %

    Average earning assets ("AEA")


    45,377.1




    5.32

    %



    46,229.6




    5.14

    %



    45,454.2




    5.08

    %

    Non-interest earning assets
























    Cash and due from banks


    172.7








    215.9








    522.5






    Allowance for loan losses


    (468.9)








    (449.3)








    (421.7)






    All other non-interest-bearing assets


    2,717.2








    2,734.7








    2,330.5






    Assets of discontinued operations


    352.9








    416.2








    591.5






    Total Average Assets

    $

    48,151.0







    $

    49,147.1







    $

    48,477.0






    Liabilities
























    Interest-bearing deposits and borrowings
























    Deposits

    $

    29,735.4




    1.65

    %


    $

    29,549.6




    1.50

    %


    $

    28,820.2




    1.29

    %

    Borrowings


    8,692.2




    4.18

    %



    9,437.0




    4.01

    %



    8,591.6




    3.92

    %

    Total interest-bearing liabilities


    38,427.6




    2.23

    %



    38,986.6




    2.11

    %



    37,411.8




    1.89

    %

    Non-interest bearing deposits


    1,503.2








    1,414.5








    1,495.9






    Other non-interest-bearing liabilities


    1,473.6








    1,401.4








    1,582.3






    Liabilities of discontinued operations


    327.9








    419.0








    579.6






    Noncontrolling interests


    -








    -








    0.2






    Stockholders' equity


    6,418.7








    6,925.6








    7,407.2






    Total Average Liabilities and Shareholders' Equity

    $

    48,151.0







    $

    49,147.1







    $

    48,477.0































    Nine Months Ended











    September 30, 2018



    September 30, 2017











    Average







    Average















    Balance



    Rate



    Balance



    Rate










    Assets
























    Interest-bearing deposits

    $

    2,645.9




    1.75

    %


    $

    6,265.5




    1.04

    %









    Investment securities and securities purchased under agreement to resell


    6,302.8




    2.75

    %



    5,105.3




    2.67

    %









    Loans and loans held for sale (net of credit balances of factoring clients)


    28,535.8




    5.94

    %



    28,259.6




    5.98

    %









    Total interest earning assets


    37,484.5




    5.11

    %



    39,630.4




    4.77

    %









    Operating lease equipment, net (including held for sale)


    7,979.8




    6.18

    %



    7,637.1




    6.42

    %









    Indemnification assets


    95.6




    -51.46

    %



    268.2




    -15.46

    %









    Average earning assets ("AEA")


    45,559.9




    5.18

    %



    47,535.7




    4.92

    %









    Non-interest earning assets
























    Cash and due from banks


    213.2








    647.3














    Allowance for loan losses


    (449.6)








    (431.6)














    All other non-interest-bearing assets


    2,736.8








    2,279.9














    Assets of discontinued operations


    415.2








    4,837.7














    Total Average Assets

    $

    48,475.5







    $

    54,869.0














    Liabilities
























    Interest-bearing deposits and borrowings
























    Deposits


    29,259.6




    1.51

    %



    29,952.9




    1.25

    %









    Borrowings


    9,089.1




    3.94

    %



    11,351.1




    3.15

    %









    Total interest-bearing liabilities


    38,348.7




    2.08

    %



    41,304.0




    1.77

    %









    Non-interest-bearing deposits


    1,464.5








    1,437.2














    Other non-interest bearing liabilities


    1,427.8








    1,642.7














    Liabilities of discontinued operations


    412.8








    1,560.3














    Noncontrolling interests


    -








    0.3














    Stockholders' equity


    6,821.7








    8,924.5















    $

    48,475.5







    $

    54,869.0














     

     

    CIT GROUP INC. AND SUBSIDIARIES


    Average Loans and Leases


    (dollars in millions)















    Quarters Ended



    September 30,



    June 30,



    September 30,



    2018



    2018



    2017


    Commercial Banking












    Commercial Finance












    Loans

    $

    10,022.6



    $

    9,912.1



    $

    9,346.2


    Assets held for sale


    107.1




    51.9




    104.0


    Total loans and leases


    10,129.7




    9,964.0




    9,450.2














    Rail












    Loans


    83.5




    81.7




    83.9


    Operating lease equipment, net


    6,348.2




    6,285.1




    6,284.3


    Assets held for sale


    1,208.6




    1,226.1




    1,093.4


    Total loans and leases


    7,640.3




    7,592.9




    7,461.6














    Real Estate Finance












    Loans


    5,387.3




    5,462.2




    5,598.4


    Assets held for sale


    11.2




    7.0




    0.6


    Total loans and leases


    5,398.5




    5,469.2




    5,599.0














    Business Capital












    Loans (net of credit balances of factoring clients)


    6,356.3




    6,157.7




    5,822.3


    Operating lease equipment, net


    513.8




    510.2




    441.2


    Assets held for sale


    10.8




    10.3




    1.0


    Total loans and leases


    6,880.9




    6,678.2




    6,264.5














    Total Segment












    Loans (net of credit balances of factoring clients)


    21,849.7




    21,613.7




    20,850.8


    Operating lease equipment, net


    6,862.0




    6,795.3




    6,725.5


    Assets held for sale


    1,337.7




    1,295.3




    1,199.0


    Total loans and leases


    30,049.4




    29,704.3




    28,775.3














    Consumer Banking












    Legacy Consumer Mortgages












    Loans


    2,981.0




    3,126.9




    4,214.6


    Assets held for sale


    -




    569.6




    256.2


    Total loans


    2,981.0




    3,696.5




    4,470.8














    Other Consumer Banking












    Loans


    3,370.2




    3,079.3




    2,236.3


    Assets held for sale


    12.7




    10.9




    3.9


    Total loans


    3,382.9




    3,090.2




    2,240.2














    Total Segment












    Loans


    6,351.2




    6,206.2




    6,450.9


    Assets held for sale


    12.7




    580.5




    260.1


    Total loans


    6,363.9




    6,786.7




    6,711.0














    Non-Strategic Portfolios












    Assets held for sale


    27.2




    43.2




    104.4


      Total loans and leases


    27.2




    43.2




    104.4














    Total loans (net of credit balances of factoring clients)


    28,200.9




    27,819.9




    27,301.7


    Total operating lease equipment, net


    6,862.0




    6,795.3




    6,725.5


    Total assets held for sale


    1,377.6




    1,919.0




    1,563.5


    Total loans and leases

    $

    36,440.5



    $

    36,534.2



    $

    35,590.7


     

     

    CIT GROUP INC. AND SUBSIDIARIES

    Credit Metrics

    (dollars in millions)


















    Quarters Ended






    September 30, 2018


    June 30, 2018


    September 30, 2017





    Gross Charge-offs to Average Loans
















    Commercial Banking

    $29.4


    0.50%


    $24.6


    0.43%


    $27.7


    0.49%





    Consumer Banking

    1.4


    0.09%


    0.8


    0.05%


    20.5


    1.27%





    Total CIT

    $30.8


    0.41%


    $25.4


    0.35%


    $48.2


    0.67%






































    Nine Months Ended










    September 30, 2018


    September 30, 2017









    Gross Charge-offs to Average Loans
















    Commercial Banking

    $108.6


    0.62%


    $92.4


    0.54%









    Consumer Banking

    2.7


    0.06%


    22.0


    0.44%









    Total CIT

    $111.3


    0.50%


    $114.4


    0.52%










































    Quarters Ended






    September 30, 2018


    June 30, 2018


    September 30, 2017





    Net Charge-offs to Average Loans
















    Commercial Banking

    $24.7


    0.42%


    $14.7


    0.25%


    $21.7


    0.39%





    Consumer Banking

    1.3


    0.08%


    0.6


    0.04%


    20.0


    1.24%





    Total CIT

    $26.0


    0.35%


    $15.3


    0.21%


    $41.7


    0.58%






































    Nine Months Ended










    September 30, 2018


    September 30, 2017









    Net Charge-offs to Average Loans
















    Commercial Banking

    $89.2


    0.51%


    $76.1


    0.45%









    Consumer Banking

    2.0


    0.04%


    20.8


    0.42%









    Total CIT

    $91.2


    0.41%


    $96.9


    0.44%









































    Non-accruing Loans to Loans(1)

    September 30, 2018


    June 30, 2018


    December 31, 2017


    September 30, 2017

    Commercial Banking

    $274.7


    1.14%


    $252.4


    1.10%


    $190.8


    0.82%


    $240.5


    1.06%

    Consumer Banking

    35.1


    0.55%


    29.2


    0.46%


    20.3


    0.34%


    19.3


    0.33%

    Non-Strategic Portfolios

    8.3


    -


    9.9


    -


    9.8


    -


    4.8


    -

    Total CIT

    $318.1


    1.04%


    $291.5


    0.99%


    $220.9


    0.76%


    $264.6


    0.93%


































    Quarters Ended












    September 30,


    June 30,


    September 30,












    2018


    2018


    2017











    Provision for Credit Losses
















    Specific allowance - impaired loans

    $6.9


    $11.5


    $2.3











    Non-specific allowance

    31.2


    21.4


    27.8











    Totals

    $38.1


    $32.9


    $30.1












































    Nine Months Ended














    September 30,


    September 30,














    2018


    2017













    Provision for Credit Losses
















    Specific allowance - impaired loans

    $17.7


    $6.3













    Non-specific allowance

    122.1


    77.9













    Totals

    $139.8


    $84.2














































    September 30,


    June 30,


    December 31,


    September 30,










    2018


    2018


    2017


    2017









    Allowance for Loan Losses
















    Specific allowance - impaired loans

    $43.7


    $36.8


    $26.0


    $35.6









    Non-specific allowance

    433.7


    430.5


    405.1


    383.9









    Totals

    $477.4


    $467.3


    $431.1


    $419.5

























    Allowance for loan losses as a percentage of total loans

    1.57%


    1.59%


    1.48%


    1.47%









    Allowance for loan losses as a percent of loans/Commercial

    1.87%


    1.90%


    1.74%


    1.73%

























    (1)Non-accrual loans include loans held for sale. NSP non-accrual loans reflected loans held for sale; since portfolio loans were insignificant, no % is displayed.

     

     

    CIT GROUP INC. AND SUBSIDIARIES


    Consolidating Income Statement


    (dollars in millions)



























    Quarters Ended



    September 30, 2018



    June 30, 2018



























    Commercial
    Banking



    Consumer
    Banking



    Non-
    Strategic
    Portfolios



    Corporate
    and Other



    Total



    Total


    Interest income
























    Interest and fees on loans

    $

    337.1



    $

    79.0



    $

    1.2



    $

    0.1



    $

    417.4



    $

    415.5


    Other interest and dividends


    1.8




    -




    0.2




    54.2




    56.2




    58.1


    Total interest income


    338.9




    79.0




    1.4




    54.3




    473.6




    473.6


    Interest expense
























    Interest on borrowings


    187.1




    (139.0)




    0.8




    41.9




    90.8




    94.6


    Interest on deposits


    3.2




    97.4




    -




    22.5




    123.1




    110.6


    Total interest expense


    190.3




    (41.6)




    0.8




    64.4




    213.9




    205.2


    Net interest revenue


    148.6




    120.6




    0.6




    (10.1)




    259.7




    268.4


    Provision for credit losses


    39.0




    (0.9)




    -




    -




    38.1




    32.9


    Net interest revenue, after credit provision


    109.6




    121.5




    0.6




    (10.1)




    221.6




    235.5


    Non-interest income
























    Rental income on operating lease equipment


    264.3




    -




    -




    -




    264.3




    261.3


    Other non-interest income


    76.4




    (18.1)




    11.6




    16.3




    86.2




    135.4


    Total non-interest income


    340.7




    (18.1)




    11.6




    16.3




    350.5




    396.7


    Non-interest expenses
























    Depreciation on operating lease equipment


    78.0




    -




    -




    -




    78.0




    77.2


    Maintenance and other operating lease expenses


    56.6




    -




    -




    -




    56.6




    63.5


    Operating expenses


    172.3




    88.9




    2.2




    (0.1)




    263.3




    267.5


    Loss on debt extinguishment and deposit redemption


    -




    -




    -




    3.5




    3.5




    19.3


    Total non-interest expenses


    306.9




    88.9




    2.2




    3.4




    401.4




    427.5


    Income from continuing operations before provision for income taxes

    $

    143.4



    $

    14.5



    $

    10.0



    $

    2.8



    $

    170.7



    $

    204.7


     

     

    CIT GROUP INC. AND SUBSIDIARIES


    Segment Margin


    (dollars in millions)























    Quarters Ended



    Nine Months Ended



    September 30,



    June 30,



    September 30,



    September 30,



    2018



    2018



    2017



    2018



    2017






















    Commercial Banking




















    Average Earning Assets (AEA)




















    Commercial Finance

    $

    10,230.6



    $

    10,068.7



    $

    9,541.0



    $

    10,153.4



    $

    9,876.8


    Rail


    7,774.6




    7,712.5




    7,542.7




    7,728.9




    7,421.2


    Real Estate Finance


    5,398.5




    5,469.2




    5,599.0




    5,500.4




    5,598.5


    Business Capital


    6,915.7




    6,714.7




    6,328.4




    6,733.4




    6,265.4


    Total

    $

    30,319.4



    $

    29,965.1



    $

    29,011.1



    $

    30,116.1



    $

    29,161.9






















    Net Finance Revenue




















    Commercial Finance

    $

    84.2



    $

    83.4



    $

    94.8



    $

    253.7



    $

    293.5


    Rail


    77.7




    71.5




    80.9




    219.2




    240.3


    Real Estate Finance


    40.2




    42.7




    50.7




    129.6




    151.2


    Business Capital


    76.2




    76.4




    75.0




    228.2




    237.4


    Total

    $

    278.3



    $

    274.0



    $

    301.4



    $

    830.7



    $

    922.4






















    Gross Yield




















    Commercial Finance


    5.78

    %



    5.66

    %



    5.58

    %



    5.58

    %



    5.44

    %

    Rail


    11.51

    %



    11.45

    %



    11.44

    %



    11.32

    %



    11.70

    %

    Real Estate Finance


    5.60

    %



    5.58

    %



    5.32

    %



    5.51

    %



    5.19

    %

    Business Capital


    9.04

    %



    9.05

    %



    8.75

    %



    9.01

    %



    8.85

    %

    Total


    7.96

    %



    7.90

    %



    7.74

    %



    7.81

    %



    7.72

    %





















    Net Finance Margin




















    Commercial Finance


    3.29

    %



    3.31

    %



    3.97

    %



    3.33

    %



    3.96

    %

    Rail


    4.00

    %



    3.71

    %



    4.29

    %



    3.78

    %



    4.32

    %

    Real Estate Finance


    2.98

    %



    3.12

    %



    3.62

    %



    3.14

    %



    3.60

    %

    Business Capital


    4.41

    %



    4.55

    %



    4.74

    %



    4.52

    %



    5.05

    %

    Total


    3.67

    %



    3.66

    %



    4.16

    %



    3.68

    %



    4.22

    %





















    Consumer Banking




















    Average Earning Assets (AEA)




















    Other Consumer Banking

    $

    3,397.7



    $

    3,098.6



    $

    2,240.2



    $

    3,077.4



    $

    2,196.2


    Legacy Consumer Mortgages


    3,035.5




    3,798.3




    4,664.1




    3,652.0




    4,904.8


    Total

    $

    6,433.2



    $

    6,896.9



    $

    6,904.3



    $

    6,729.4



    $

    7,101.0






















    Net Finance Revenue




















    Other Consumer Banking

    $

    90.3



    $

    87.6



    $

    58.4



    $

    248.4



    $

    157.5


    Legacy Consumer Mortgages


    30.3




    34.7




    49.8




    104.0




    168.4


    Total

    $

    120.6



    $

    122.3



    $

    108.2



    $

    352.4



    $

    325.9






















    Gross Yield




















    Other Consumer Banking


    3.66

    %



    3.64

    %



    3.49

    %



    3.62

    %



    3.50

    %

    Legacy Consumer Mortgages


    6.31

    %



    5.99

    %



    6.23

    %



    6.05

    %



    6.42

    %

    Total


    4.91

    %



    4.93

    %



    5.34

    %



    4.94

    %



    5.52

    %





















    Net Finance Margin




















    Other Consumer Banking


    10.63

    %



    11.31

    %



    10.43

    %



    10.77

    %



    9.56

    %

    Legacy Consumer Mortgages


    4.01

    %



    3.65

    %



    4.27

    %



    3.80

    %



    4.58

    %

    Total


    7.50

    %



    7.09

    %



    6.27

    %



    6.98

    %



    6.12

    %





















    Non-Strategic Portfolios




















    AEA

    $

    78.6



    $

    123.0



    $

    226.9



    $

    116.8



    $

    307.7


    Net Finance Revenue


    0.6




    0.1




    1.6




    1.4




    4.8


    Gross Yield


    7.12

    %



    6.18

    %



    8.11

    %



    6.51

    %



    7.71

    %

    Net Finance Margin


    3.05

    %



    0.33

    %



    2.82

    %



    1.60

    %



    2.08

    %





















    Gross Yield includes interest income and rental income as a % of AEA.


    Net Finance Margin (NFM) reflects Net Finance Revenue divided by AEA.


     

     

    CIT GROUP INC. AND SUBSIDIARIES


    Non-GAAP Disclosures


    (dollars in millions)






















    Non-GAAP financial measures disclosed by management are meant to provide additional information and insight relative to business trends to investors and, in certain cases, to present financial information as measured by rating agencies and other users of financial information.  These measures are not in accordance with, or a substitute for, GAAP and may be different from, or inconsistent with, non-GAAP financial measures used by other companies.























    At or for the Quarters Ended



    Nine Months Ended



    September 30,



    June 30,



    September 30,



    September 30,


    Total Net Revenues(1)

    2018



    2018



    2017



    2018



    2017


    Interest income

    $

    473.6



    $

    473.6



    $

    454.0



    $

    1,398.4



    $

    1,387.9


    Rental income on operating lease equipment


    264.3




    261.3




    252.3




    779.2




    754.8


      Finance revenue (Non-GAAP)


    737.9




    734.9




    706.3




    2,177.6




    2,142.7


    Interest expense


    213.9




    205.2




    176.7




    599.6




    549.0


    Depreciation on operating lease equipment


    78.0




    77.2




    71.1




    231.6




    222.0


    Maintenance and other operating lease expenses


    56.6




    63.5




    57.9




    177.5




    165.0


    Net finance revenue (NFR)(6) (Non-GAAP)


    389.4




    389.0




    400.6




    1,168.9




    1,206.7


    Other non-interest income


    86.2




    135.4




    63.3




    326.3




    227.0


    Total net revenues (Non-GAAP)

    $

    475.6



    $

    524.4



    $

    463.9



    $

    1,495.2



    $

    1,433.7






















    NFR (Non-GAAP)

    $

    389.4



    $

    389.0



    $

    400.6



    $

    1,168.9



    $

    1,206.7


    Suspended depreciation on assets HFS


    (8.6)




    (8.6)




    (7.8)




    (26.5)




    (7.8)


    Excess interest costs over interest income from Commercial Air proceeds usage


    -




    -




    -




    -




    23.4


    Interest on excess cash


    -




    -




    -




    -




    (9.1)


    Adjusted NFR (Non-GAAP)

    $

    380.8



    $

    380.4



    $

    392.8



    $

    1,142.4



    $

    1,213.2


    NFR as a % of AEA


    3.43

    %



    3.37

    %



    3.53

    %



    3.42

    %



    3.38

    %

    NFR as a % of AEA, adjusted for noteworthy items


    3.36

    %



    3.29

    %



    3.46

    %



    3.34

    %



    3.49

    %





















    Net Operating Lease Revenues(2)




















    Rental income on operating leases

    $

    264.3



    $

    261.3



    $

    252.3



    $

    779.2



    $

    754.8


    Depreciation on operating lease equipment


    78.0




    77.2




    71.1



    $

    231.6



    $

    222.0


    Maintenance and other operating lease expenses


    56.6




    63.5




    57.9



    $

    177.5



    $

    165.0


    Net operating lease revenue (Non-GAAP)

    $

    129.7



    $

    120.6



    $

    123.3



    $

    370.1



    $

    367.8








    Operating Expenses




















    Operating expenses

    $

    263.3



    $

    267.5



    $

    277.3



    $

    812.1



    $

    884.5


    Intangible asset amortization


    6.0




    6.0




    6.2




    18.0




    18.6


    Restructuring costs


    -




    -




    2.9




    -




    21.1


    Operating expenses excluding restructuring costs, intangible assets amortization, and other noteworthy
    items(4)

    $

    257.3



    $

    261.5



    $

    268.2



    $

    794.1



    $

    844.8






















    Operating expenses (excluding restructuring costs and intangible assets amortization) as a % of AEA
    (excluding noteworthy items)


    2.27

    %



    2.26

    %



    2.36

    %



    2.32

    %



    2.43

    %





















    Total Net Revenue (Non-GAAP)

    $

    475.6



    $

    524.4



    $

    463.9



    $

    1,495.2



    $

    1,433.7


    Suspended depreciation on assets HFS


    (8.6)




    (8.6)




    (7.8)




    (26.5)




    (7.8)


    Financial Freedom Transaction impairments on reverse mortgage related assets


    -




    -




    26.8




    -




    26.8


    Net costs of excess liquidity


    -




    -




    -




    -




    14.3


    CTA charge


    -




    -




    -




    -




    8.1


    Gain and other revenues from sale of reverse mortgage portfolio


    -




    (29.3)




    -




    (29.3)




    -


    Impairment of LCM indemnification asset


    21.2




    -




    -




    21.2




    -


    Release of valuation reserve on AHFS


    (10.6)




    -




    -




    (10.6)




    -


    Total Net Revenue, excluding noteworthy items (Non-GAAP)

    $

    477.6



    $

    486.5



    $

    482.9



    $

    1,450.0



    $

    1,475.1


    Net Efficiency Ratio(5) (Non-GAAP)


    54.1

    %



    49.9

    %



    57.8

    %



    53.1

    %



    58.9

    %

    Net Efficiency Ratio excluding noteworthy items(5) (Non-GAAP)


    53.9

    %



    53.8

    %



    55.5

    %



    54.8

    %



    57.3

    %





















    Other non-interest income

    $

    86.2



    $

    135.4



    $

    63.3



    $

    326.3



    $

    227.0


    Financial Freedom Transaction impairments on reverse mortgage related assets


    -




    -




    26.8




    -




    26.8


    CTA charge


    -




    -




    -




    -




    8.1


    Gain and other revenues from sale of reverse mortgage portfolio


    -




    (29.3)




    -




    (29.3)




    -


    Impairment charge to reduce indemnification asset balance


    21.2




    -




    -




    21.2




    -


    Release of valuation reserve on AHFS


    (10.6)




    -




    -




    (10.6)




    -


    Total other non-interest income, excluding noteworthy items (Non-GAAP)

    $

    96.8



    $

    106.1



    $

    90.1



    $

    307.6



    $

    261.9






















    Average Earning Assets




















    Average Earning Assets (for the respective periods) (Non-GAAP)

    $

    45,377.1



    $

    46,229.6



    $

    45,454.2



    $

    45,559.9



    $

    47,535.7


    AEA adjustment for Commercial Air sale impacts


    -




    -




    -




    -




    (1,244.0)


    AEA, excluding noteworthy items (Non-GAAP)

    $

    45,377.1



    $

    46,229.6



    $

    45,454.2



    $

    45,559.9



    $

    46,291.7























    September 30,



    June 30,



    September 30,










    Period End Earning Assets(3)

    2018



    2018



    2017










    Loans

    $

    30,495.8



    $

    29,348.4



    $

    28,505.3










    Operating lease equipment, net


    6,888.7




    6,833.9




    6,724.2










    Assets held for sale


    1,380.5




    1,335.8




    2,162.0