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CIT Announces Fourth Quarter and Full Year 2018 Results
Tuesday, January 29, 2019 06:30 AM

NEW YORK, Jan. 29, 2019 /PRNewswire/ --

(PRNewsfoto/CIT Group Inc.)

Financial Results:

  • Fourth quarter net income available to common shareholders and income from continuing operations available to common shareholders were each $82 million or $0.78 per diluted common share
  • Excluding noteworthy items, fourth quarter income from continuing operations available to common shareholders1 of $127 million or $1.21 per diluted common share
  • Full year net income available to common shareholders of $428 million or $3.61 per diluted common share; income from continuing operations available to common shareholders of $453 million or $3.82 per diluted common share
  • Excluding noteworthy items, full year income from continuing operations available to common shareholders of $480 million or $4.04 per diluted common share
    • Income from continuing operations excluding noteworthy items per common diluted share grew more than 30% in 2018
    • Tangible book value per common share grew 3% compared to year-end 2017

Highlights:

  • Delivered on our 2018 financial targets through steady execution of our strategic plan:
    • Grew average loans and leases in the core portfolios2
    • Achieved operating expense goal3
    • Reduced CET1 ratio
    • Reached return on tangible common equity (ROTCE)4 goal
  • Increased full year average loans and leases by 1%, notwithstanding the divestiture of non-core portfolios. Average loans and leases in the core portfolios for the full year 2018 increased 6%
    • Driven by strong growth in our digitally-enabled equipment finance platforms
  • Grew full year average consumer deposits in the direct bank by 25%; added over 60,000 customers in 2018
  • Continued to simplify, de-risk and return capital in 2018:
    • Sold European railcar leasing business, reverse mortgage servicing business and related portfolio
    • Improved funding profile through reduction of senior unsecured debt and structured financings and termination of our remaining total return swap
    • Repurchased $1.6 billion in common shares
  • Received a non-objection from our regulators to repurchase up to $450 million of common stock through Sept. 30, 2019 and to increase our quarterly dividend by 40% to 35 cents per common share starting in 2Q19, which is subject to CIT Board approval

CIT Group Inc. (NYSE: CIT) today reported fourth quarter net income available to common shareholders of $82 million or $0.78 per diluted common share, compared to a net loss available to common shareholders of $98 million or $0.74 per diluted common share for the year-ago quarter. Income from continuing operations available to common shareholders for the fourth quarter was $82 million or $0.78 per diluted common share, compared to a loss available to common shareholders of $93 million or $0.70 per diluted common share in the year-ago quarter.

Income from continuing operations available to common shareholders excluding noteworthy items for the fourth quarter was $127 million or $1.21 per diluted common share, compared to $130 million or $0.99 per diluted common share in the year-ago quarter, as lower net finance revenue and lower other non-interest income were offset by lower operating expenses and a lower effective income tax rate. 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.

Net income available to common shareholders for the full year was $428 million or $3.61 per diluted common share, compared to net income available to common shareholders of $458 million or $2.80 per diluted common share for the prior year. Income from continuing operations available to common shareholders for the full year was $453 million or $3.82 per diluted common share, compared to income available to common shareholders of $250 million or $1.52 per diluted common share in the prior year.

Income from continuing operations available to common shareholders excluding noteworthy items for the full year was $480 million or $4.04 per diluted common share, compared to $504 million or $3.07 per diluted common share in the prior year, as a decline in net finance revenue (reflecting the sale of NACCO and the reverse mortgage portfolio) and an increase in the provision for credit losses were partially offset by lower operating expenses, higher other non-interest income and a lower effective income tax rate. 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.

"2018 was a pivotal year. We successfully executed on our multi-year strategic plan, delivered on our financial targets and achieved significant earnings per share growth," said CIT Chairwoman and Chief Executive Officer Ellen R. Alemany. "Through steady implementation of our plan we completed two complex divestitures, significantly reduced operating expenses, grew our core assets by 6 percent, increased deposits, repurchased $1.6 billion of common stock and achieved our 2018 return on tangible common equity goal."

Alemany continued, "We enter 2019 stronger and ready to build on our momentum and continue to create shareholder value. The investments we have made in our operations and technology, paired with our decades of industry expertise, are a source of strength in the marketplace. We are committed to further improving profitability through thoughtful asset growth, further capital optimization, improved risk-adjusted returns, and enhanced operating efficiency."

Return on average common equity from continuing operations available to common shareholders in the current quarter was 5.8%. Return on Tangible Common Equity (ROTCE) from continuing operations in the current quarter was 6.7%. ROTCE from continuing operations excluding noteworthy items3 in the current quarter was 10.1%, in line with our 2018 financial target. Tangible book value per common share at Dec. 31, 2018 was $51.15. The preliminary Common Equity Tier 1 Capital ratio decreased from the prior quarter end and remained strong at 12.0%, and the preliminary Total Capital ratio decreased to 14.8% at Dec. 31, 2018.

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

  • $52 million (after tax) ($0.50 per diluted common share) net charge related to the termination of our Dutch total return swap facility.
  • $19 million (after tax) ($0.18 per diluted common share) gain on the sale of NACCO, our European railcar leasing business, which closed in October 2018.
  • $12 million (after tax) ($0.11 per diluted common share) in debt extinguishment costs related to the redemption of $434 million in unsecured senior debt and $465 million of Rail-related secured debt.

Selected Financial Highlights

Select Financial Highlights*













4Q18 change from











2018
change*
from


($ in millions)

4Q18



3Q18



4Q17



3Q18




4Q17



2018



2017



2017









































Net finance revenue(1)

$

374



$

389



$

399



$

(15)



-4

%



$

(25)



-6

%


$

1,543



$

1,606



$

(63)


Non-interest income


48




86




137




(39)



-45

%




(90)



-65

%



374




364




10


Total net revenue


421




476




537




(54)



-11

%




(115)



-21

%



1,917




1,970




(54)


Non-interest expenses


274




267




561




7



3

%




(288)



-51

%



1,109




1,664




(556)


Income (loss) from continuing operations before credit provision


148




209




(25)




(61)



-29

%




173


NM




808




306




502


Provision for credit losses


31




38




30




(7)



-18

%




1



3

%



171




115




56


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


117




171




(55)




(54)



-32

%




172


NM




637




192




445


Provision (benefit) for income taxes


25




41




28




(16)



-40

%




(3)



-10

%



165




(68)




233


Income (loss) from continuing operations


92




129




(83)




(38)



-29

%




175


NM




472




259




213


Income (loss) from discontinued operations, net of taxes


0




2




(5)




(2)



-95

%




5


NM




(25)




209




(234)


Net income (loss)


92




132




(88)




(40)



-30

%




180


NM




447




468




(21)


Preferred stock dividends


10




-




10




10


NM





(0)



-3

%



19




10




9


Net income available to common shareholders

$

82



$

132



$

(98)



$

(49)



-37

%



$

180


NM



$

428



$

458



$

(30)


Income (loss) from continuing operations available to common
shareholders

$

82



$

129



$

(93)



$

(47)



-36

%



$

175


NM



$

453



$

250



$

204


Income from continuing operations available to common
shareholders, excluding noteworthy items(2)

$

127



$

131



$

130



$

(4)



-3

%



$

(3)



-2

%


$

480



$

504



$

(24)









































Per common share







































Diluted income (loss) per common share

$

0.78



$

1.15



$

(0.74)



$

(0.37)







$

1.52






$

3.61



$

2.80




0.81


Diluted income per common share, excluding noteworthy items(2)

$

1.21



$

1.17



$

0.95



$

0.04







$

0.26






$

3.94



$

3.39




0.56


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

$

51.15



$

50.02



$

49.58



$

1.14







$

1.58






$

51.15



$

49.58




1.58


Average diluted common shares outstanding (in thousands)


105,149




114,007




131,343




(8,858)








(26,194)







118,777




163,950




(45,173)









































Capital adequacy







































CET1 Ratio(3)


12.0

%



12.4

%



14.4

%


-42bps







NM







12.0

%



14.4

%


NM


Total Capital Ratio(3)


14.8

%



15.1

%



16.2

%


-30bps







NM







14.8

%



16.2

%


NM









































Asset quality







































Net charge-offs as a % of average loans


0.32

%



0.35

%



0.26

%


-3bps







6bps







0.39

%



0.39

%


-1bps


Allowance for loan losses as a % of loans


1.59

%



1.57

%



1.48

%


2bps







11bps







1.59

%



1.48

%


11bps









































Key performance metrics







































Net finance margin(1)


3.39

%



3.43

%



3.59

%


-4bps







-19bps







3.41

%



3.43

%


-2bps


Net finance margin, excluding noteworthy items(2)


3.39

%



3.36

%



3.51

%


3bps







-12bps







3.35

%



3.49

%


-14bps


Loans and leases to deposit ratio


121

%



126

%



130

%


NM







NM







121

%



130

%


NM


CIT Bank Loans and leases to deposit ratio


101

%



101

%



104

%


76bps







NM







101

%



104

%


NM


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


5.81

%



8.62

%



-5.29

%


NM







NM







7.30

%



3.53

%


NM


Return on tangible common equity (available to common
shareholders, continuing operations)(1)


6.67

%



9.66

%



8.42

%


NM







NM







8.20

%



7.72

%


48bps


Return on tangible common equity (available to common
shareholders, continuing operations), excluding noteworthy
items(1)(2)


10.12

%



9.78

%



8.47

%


34bps







NM







8.66

%



8.24

%


42bps


Return on AEA, applicable to common shareholders(1)


0.75

%



1.16

%



-0.88

%


-41bps







NM







0.95

%



0.98

%


-3bps


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


1.15

%



1.17

%



1.12

%


-2bps







3bps







1.04

%



1.21

%


-17bps


Net efficiency ratio(1)


59.8

%



54.1

%



49.6

%


NM







NM







54.6

%



56.4

%


NM


Net efficiency ratio, excluding noteworthy items(2)


54.1

%



53.9

%



53.4

%


23bps







73bps







54.6

%



56.3

%


NM


Headcount


3,678




3,757




3,909




(79)








(231)







3,678




3,909




(231)
















































(1)Net finance revenue; tangible book value per common share; net finance margin; return on tangible common equity; return on tangible common equity, excluding noteworthy items, return on AEA; return on AEA, excluding noteworthy items; and net efficiency ratio are non-GAAP measures. 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 items5 was $127 million down from $131 million in the prior quarter, primarily reflecting lower net finance revenue and other non-interest income and the semi-annual preferred dividend paid in the current quarter, partially offset by a decline in operating expenses and credit costs and a lower effective income tax rate.

Net Finance Revenue

Net Finance Revenue*




4Q18 change from


($ in millions)

4Q18



3Q18



4Q17



3Q18




4Q17





























Interest income

$

492



$

474



$

448



$

18



4

%



$

44



10

%

Rental income on operating leases


230




264




253




(35)



-13

%




(23)



-9

%

Depreciation on operating lease equipment


79




78




74




1



2

%




5



7

%

Maintenance and other operating lease expenses


53




57




58




(4)



-7

%




(5)



-9

%

Net rental income on operating leases


97




130




120




(32)



-25

%




(23)



-19

%

Interest expense


216




214




169




2



1

%




47



28

%

Net finance revenue(1)

$

374



$

389



$

399



$

(15)



-4

%



$

(25)



-6

%

Average earning assets(1)

$

44,113



$

45,377



$

44,562



$

(1,264)



-3

%



$

(449)



-1

%

Net finance margin(1)


3.39

%



3.43

%



3.59

%


-4bps







-19bps





Excluding Noteworthy Items(1)



























Net finance revenue

$

374



$

381



$

391



$

(7)



-2

%



$

(17)



-4

%

Average earning assets

$

44,113



$

45,377



$

44,562



$

(1,264)



-3

%



$

(449)



-1

%

Net finance margin


3.39

%



3.36

%



3.51

%


3bps







-12bps











(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 revenue6 was $374 million, down from $389 million in the prior quarter. Net finance revenue in the prior quarter 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 revenue6 was $374 million, down from $381 million in the prior quarter, as lower net operating lease income, driven by a lease prepayment in Rail in the prior quarter and the sale of NACCO early in the current quarter, and an increase in deposit costs were partially offset by higher income from commercial loans and higher net purchase accounting accretion in the Consumer Banking segment.

Net finance revenue as a percentage of average earning assets ("net finance margin6") excluding noteworthy items was 3.39%, a 3 bps increase from 3.36% in the prior quarter. The increase in net finance margin excluding noteworthy items reflects higher yields on commercial loans and investments, cash representing a smaller portion of average earning assets and higher net purchase accounting accretion, partially offset by a decrease in lease yields and higher deposit costs.

Net finance revenue in the year-ago quarter 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 revenue decreased $17 million or 4% compared to the year-ago quarter, primarily due to lower average earning assets from the NACCO and reverse mortgage portfolio sales and higher funding costs, partially offset by higher income on loans in the Commercial Banking segment and on investment securities.

Net finance margin excluding noteworthy items decreased 12 bps compared to the year-ago quarter, reflecting lower net rental income and higher funding costs, partially offset by increases in yields on loans and cash and investments.

Other Non-interest Income

Other Non-Interest Income*




4Q18 change from


($ in millions)

4Q18



3Q18



4Q17



3Q18




4Q17





























Fee revenues

$

22



$

28



$

30



$

(7)



-23

%



$

(9)



-29

%

Factoring commissions


26




27




27




(1)



-4

%




(1)



-2

%

Gains on leasing equipment, net of impairments


18




14




9




4



32

%




9



98

%

Gains on investment securities, net of impairments


5




4




11




1



31

%




(7)



-59

%

BOLI income


6




7




6




(1)



-9

%




0



3

%

Other revenues


(29)




7




54




(36)


NM





(83)


NM


Total other non-interest income

$

48



$

86



$

137



$

(39)



-45

%



$

(90)



-65

%




























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

$

92



$

97



$

108



$

(5)



-5

%



$

(16)



-15

%







(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 $48 million compared to $86 million in the prior quarter. Other non-interest income in the current quarter included aggregate noteworthy items of a $44 million net charge in other revenue from the $25 million gain on the sale of NACCO and the $69 million net charge related to the termination of our Dutch total return swap facility. In the prior quarter, other non-interest income 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.

Excluding noteworthy items, other non-interest income7 was $92 million, compared to $97 million in the prior quarter, primarily driven by lower fee revenues from a decrease in capital markets fees and lower income from customer derivatives, partially offset by higher gains on the sale of leasing equipment. Factoring commissions decreased $1 million, as higher volumes were offset by a lower average commission rate.

Other non-interest income in the year-ago quarter included a $29 million benefit in other revenues related to the cumulative effect of an accounting policy change for LIHTC investments, which was more than offset by a related $38 million expense in the provision for income taxes. Other non-interest income excluding noteworthy items decreased by $16 million from the year-ago quarter reflecting lower capital markets fees and decreases in gains from the reverse mortgage portfolio in LCM in the Consumer Banking segment.

Operating Expenses

Operating Expenses*




4Q18 change from


($ in millions)

4Q18



3Q18



4Q17



3Q18




4Q17





























Compensation and benefits

$

130



$

137



$

139



$

(7)



-5

%



$

(9)



-6

%

Technology


34




32




31




2



6

%




3



11

%

Professional fees


20




17




29




3



17

%




(9)



-32

%

Insurance


14




16




16




(2)



-12

%




(2)



-11

%

Net occupancy expense


17




16




17




1



7

%




1



4

%

Advertising and marketing


11




11




13




0



0

%




(2)



-17

%

Other expenses


26




28




23




(2)



-7

%




4



16

%

Operating expenses, excluding restructuring costs and intangible
asset amortization(1)


252




257




266




(5)



-2

%




(14)



-5

%

Intangible asset amortization


6




6




6




(0)



-2

%




(0)



-3

%

Restructuring costs


0




0




32




0


NM





(32)



-100

%

Total operating expenses

$

258



$

263



$

304



$

(5)



-2

%



$

(46)



-15

%

Net efficiency ratio(1)


59.8

%



54.1

%



49.6

%


NM







NM
































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

$

252



$

257



$

266



$

(5)



-2

%



$

(14)



-5

%

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


54.1

%



53.9

%



53.4

%


23bps







73bps











(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 amortization8 was $252 million, a decrease from $257 million in the prior quarter, driven primarily by decreases in employee costs and FDIC insurance costs, partially offset by an increase in professional fees and technology costs. The sale of NACCO contributed $3 million to the decline in operating expenses, the majority of which was in employee costs.

Operating expenses in the year-ago quarter included $32 million in restructuring charges. Compared to the year-ago quarter, operating expenses excluding noteworthy items and intangible asset amortization decreased $14 million or 5%, primarily reflecting lower professional fees and employee costs, partially offset by higher other non-income tax expenses.

The net efficiency ratio8 increased to 60% compared to 54% in the prior quarter. The net efficiency ratio excluding noteworthy items8 was 54% unchanged from the prior quarter and up 1% from the year-ago quarter, as the decreases in net finance revenue and other non-interest income were offset by the decrease in operating expenses.

Debt Extinguishment Costs
We recognized $16 million in debt extinguishment costs associated with the redemption of $434 million of unsecured senior debt and of $465 million of Rail-related secured debt from the proceeds of the NACCO sale earlier in the quarter. In the prior quarter, 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.

Income Taxes
The effective tax rate in the current quarter was 21% and for the full year 2018 was 26%. Excluding discrete tax items and noteworthy items, the effective tax rate was 24% in the current quarter, 28% in the prior quarter and 39% in the year-ago quarter. The current quarter effective tax rate was positively impacted by a decrease in state and local income taxes and tax credits recognized for research and development costs.

The provision for income taxes in the current quarter of $25 million included an aggregate of $2 million in discrete tax benefits. The provision for income taxes in the prior quarter of $41 million included an aggregate of $5 million in discrete tax benefits, and the provision for income taxes in the year-ago quarter of $28 million included an aggregate $26 million benefit from noteworthy items, including the impact of tax items related to NACCO, the change in accounting policy for LIHTC and U.S. tax reform and an additional aggregate $22 million in discrete tax benefits from other tax adjustments, including the reversal of a valuation allowance related to a restructured international legal entity.

Balance Sheet Highlights:

Earning Assets

Earning Assets*




4Q18 change from


($ in millions)

4Q18



3Q18



4Q17



3Q18




4Q17





























Loans (including assets held for sale)

$

30,884



$

30,700



$

30,210



$

184



1

%



$

674



2

%

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


6,971




8,065




7,906




(1,095)



-14

%




(936)



-12

%

Loans and leases


37,854




38,765




38,116




(911)



-2

%




(262)



-1

%

Interest-bearing cash


1,597




1,200




1,440




397



33

%




157



11

%

Investment securities and securities purchased under agreement
to resell


6,634




6,540




6,620




94



1

%




14



0

%

Indemnification asset


11




27




142




(16)



-60

%




(132)



-92

%

Credit balances of factoring clients


(1,674)




(1,672)




(1,469)




(2)



0

%




(206)



-14

%

Total earning assets(1)

$

44,421



$

44,859



$

44,850



$

(438)



-1

%



$

(428)



-1

%

Average earning assets(1)

$

44,113



$

45,377



$

44,562



$

(1,264)



-3

%



$

(449)



-1

%






(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 a reduction in operating leases from the NACCO sale, partially offset by an increase in interest bearing cash and loans. Total earning assets decreased 1% also compared to the year-ago quarter, primarily reflecting a reduction in operating leases from the NACCO sale and a decline in consumer loans from the sale of the reverse mortgage portfolio and run-off of the LCM portfolio, partially offset by growth in commercial loans and in consumer loans in Other Consumer Lending.

Average earning assets decreased 3% from the prior quarter, primarily due to a reduction in operating leases from the NACCO sale and a reduction in interest-bearing cash, which was used to redeem debt and repurchase common shares, partially offset by growth in commercial loans. Average earning assets compared to the year-ago quarter declined 1%, primarily reflecting a reduction in operating leases from the NACCO sale, a decline in consumer loans from the sale of the reverse mortgage portfolio and run-off of the LCM portfolio, and a decline in interest-bearing cash, partially offset by growth in the core portfolios and the investment portfolio.

Average loans and leases declined 2% in the quarter, primarily driven by a reduction in operating leases from the NACCO sale and run-off of the LCM portfolio, while average loans and leases in the core portfolios grew by 2% compared to the prior quarter, as strong growth in funded volume in the Commercial Finance, Real Estate Finance and Business Capital divisions of Commercial Banking was partially offset by an increase in prepayments. Average loans and leases in the core portfolio grew 8% compared to the year-ago quarter and 6% compared to the full year 2017, primarily driven by growth in the Business Capital and Commercial Finance divisions of Commercial Banking and the Other Consumer Lending division of Consumer Banking.

Cash and Investment Securities
Of the $8.2 billion in interest-bearing cash and investment securities (including securities purchased under agreements to resell) at Dec. 31, 2018, $7.1 billion was at CIT Bank, N.A. (CIT Bank) and $0.8 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*




4Q18 change from


($ in millions)

4Q18



3Q18



4Q17



3Q18




4Q17





























Noninterest-bearing checking

$

1,521



$

1,296



$

1,352



$

225



17

%



$

169



13

%

Interest-bearing checking


1,553




1,768




2,653




(214)



-12

%




(1,100)



-41

%

Other money markets/sweeps


4,990




4,795




5,076




195



4

%




(86)



-2

%

Savings and online money market accounts


8,958




8,268




5,987




690



8

%




2,971



50

%

Time deposits


14,066




14,507




14,344




(441)



-3

%




(278)



-2

%

Other


152




192




158




(40)



-21

%




(6)



-4

%

Total deposits

$

31,240



$

30,825



$

29,569



$

415



1

%



$

1,670



6

%

Unsecured borrowings

$

3,808



$

4,238



$

3,738



$

(429)



-10

%



$

71



2

%

Secured borrowings


4,310




4,437




5,237




(126)



-3

%




(927)



-18

%

Total borrowings

$

8,119



$

8,674



$

8,974



$

(555)



-6

%



$

(856)



-10

%





* Certain balances may not sum due to rounding.


Total deposits at Dec. 31, 2018 represented approximately 79% of CIT's funding. Total deposits increased 1% compared to Sep.30, 2018, primarily driven by growth in savings and online money market accounts, partially offset by a decrease in time deposits. Total deposits increased 6% compared to Dec. 31, 2017, primarily driven by growth in savings and online money market accounts, partially offset by a decrease in interest-bearing checking.

The loans and leases-to-deposits ratio at CIT Bank was 101% at Dec. 31, 2018, unchanged from Sep. 30, 2018 and down from 104% at Dec. 31, 2017. For CIT Group, the loans and leases-to-deposits ratio was 121% at Dec. 31, 2018, down from 126% at Sep. 30, 2018 and 130% at Dec. 31, 2017, primarily driven by liability management actions including those following the NACCO sale.

Total average deposits decreased by $374 million or 1% compared to the prior quarter, driven by a decline in the branch, online and brokered channels. The weighted average rate on average outstanding deposits increased 10 bps to 1.68% from 1.58% in the prior quarter. Total average deposits increased by $1.2 billion or 4% compared to the year-ago quarter, driven by growth in the online channel, partially offset by declines in the branch, commercial and brokered channels. Compared to the year-ago quarter, the weighted average rate on average outstanding deposits increased 44 bps from 1.24%. The rate increases from the prior and year-ago quarters both primarily reflect increases in the average savings and online money market accounts and time deposits in the online, retail and brokered channels, partially offset by a reduction in the commercial channel.

Unsecured borrowings comprised 10% of the funding mix at Dec. 31, 2018, down from 11% at Sep. 30, 2018. During the quarter we redeemed $431 million of our 5.375% senior unsecured debt due 2020 and acquired $3 million of our 5% senior unsecured debt due 2022 through open market repurchases.

The weighted average coupon on our unsecured senior and subordinated debt was 5.02% at Dec. 31, 2018, with a weighted average maturity of approximately 5.0 years, compared to 5.05% at Sep. 30, 2018, with a weighted average maturity of approximately 4.9 years.

Secured borrowings decreased compared to the prior quarter, as a portion of the net proceeds from the sale of NACCO was used to terminate our Dutch subsidiary's total return swap facility (TRS) and redeem the $465 million railcar securitization that served as the TRS's reference obligation. This was partially offset by an increase in FHLB borrowings in the quarter. Secured borrowings comprised 11% of the funding mix at Dec. 31, 2018, unchanged from the level at Sep. 30, 2018.

Capital

Capital*




4Q18 change from


($ in millions, except per share data)

4Q18



3Q18



4Q17



3Q18




4Q17





























Common stockholders' equity

$

5,622



$

5,995



$

6,995



$

(374)



-6

%



$

(1,373)



-20

%

Tangible common equity

$

5,163



$

5,530



$

6,512



$

(368)



-7

%



$

(1,350)



-21

%

Total risk-based capital(1)

$

6,519



$

6,824



$

7,233



$

(305)



-4

%



$

(713)



-10

%

Risk-weighted assets(1)

$

44,052



$

45,193



$

44,687



$

(1,142)



-3

%



$

(635)



-1

%




























Book value per common share (BVPS)

$

55.70



$

54.22



$

53.25



$

1.48



3

%



$

2.45



5

%

Tangible book value per common share (TBVPS)

$

51.15



$

50.02



$

49.58



$

1.14



2

%



$

1.58



3

%

CET1 ratio(1)


12.0

%



12.4

%



14.4

%


-42bps







NM





Total capital ratio(1)


14.8

%



15.1

%



16.2

%


-30bps







NM





Tier 1 leverage ratio(1)


11.7

%



12.0

%



13.8

%


-31bps







NM











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


* Certain balances may not sum due to rounding.


Capital returns during the quarter included the repurchase of approximately 9.7 million common shares at an average share price of $47.45, resulting in the completion of our $750 million share repurchase authorization. Capital actions in the quarter also included a regular quarterly cash dividend of $0.25 per common share.

Common stockholders' equity decreased from the prior quarter, primarily driven by capital returns, partially offset by net income in the current quarter. Tangible book value per common share increased in the quarter to $51.15, as net income and the reduced share count were partially offset by share repurchases and the quarterly dividend.

Total common shares outstanding was 100.9 million at Dec. 31, 2018, down from 110.6 million at Sep. 30, 2018 and 131.4 million at Dec. 31, 2017.

As a result of significant common share repurchases over the past two years, we retired 48 million common shares that were held as treasury shares in the current quarter, which did not impact total stockholders' equity but reduced treasury stock by $2.3 billion, with corresponding reductions in paid-in capital ($2.0 billion) and retained earnings ($0.3 billion).

The preliminary Common Equity Tier 1 Capital ratio decreased from the prior quarter and remained strong at 12.0%. Common Equity Tier 1 Capital decreased, primarily from capital returns in the quarter, partially offset by earnings, a decrease in goodwill related to the NACCO sale and a decrease in the DTA deduction. Risk-weighted assets (RWA) decreased, primarily reflecting the NACCO sale. The preliminary Total Capital ratio also decreased from the prior quarter to 14.8%.

On Jan. 22, 2019, the Board of Directors declared a quarterly cash dividend of $0.25 per common share on outstanding common stock. The dividend is payable on Feb. 22, 2019 to common shareholders of record as of Feb. 8, 2019.

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

Asset Quality

Asset Quality*




4Q18 change from


($ in millions)

4Q18



3Q18



4Q17



3Q18




4Q17





























Net charge-offs (NCOs)

$

24



$

26



$

18



$

(2)



-7

%



$

6



32

%

NCOs as a % of average loans


0.32

%



0.35

%



0.26

%


-3bps







6bps





Non-accrual loans

$

282



$

318



$

221



$

(36)



-11

%



$

61



28

%

OREO

$

32



$

34



$

55



$

(2)



-6

%



$

(23)



-41

%

Provision for credit losses

$

31



$

38



$

30



$

(7)



-18

%



$

1



3

%

Total portfolio allowance as a % of loans


1.59

%



1.57

%



1.48

%


2bps







11bps









* Certain balances may not sum due to rounding.


Provision
The provision for credit losses was $31 million in the current quarter including $28 million related to the Commercial Banking segment and $4 million related to the Consumer Banking segment. In the prior quarter, the $38 million provision for credit losses included $39 million related to the Commercial Banking segment, while the Consumer Banking segment had a $1 million reserve release. The decrease in the provision for credit losses from the prior quarter was primarily driven by lower provisions in the Real Estate Finance and Business Capital divisions of Commercial Banking and lower net charge-offs in the Commercial Finance division of Commercial Banking. The provision in the year-ago quarter was relatively unchanged at $30 million.

Net Charge-offs
Net charge-offs were $24 million (0.32% of average loans), compared to $26 million (0.35% of average loans) in the prior quarter and $18 million (0.26% of average loans) in the year-ago quarter.

Nearly all net charge-offs are in the Commercial Banking segment. Net charge-offs in the Commercial Banking segment were $23 million (0.38% of average loans), down from $25 million (0.42% of average loans) in the prior quarter and up from $18 million (0.32% of average loans) in the year-ago quarter.

Loan Loss Allowance
The allowance for loan losses was $490 million (1.59% of loans) at Dec. 31, 2018, compared to $477 million (1.57% of loans) at Sep. 30, 2018 and $431 million (1.48% of loans) at Dec. 31, 2017.

In the Commercial Banking segment, the allowance for loan losses was $460 million (1.90% of loans) at Dec. 31, 2018, compared to $450 million (1.87% of loans) at Sep. 30, 2018 and $402 million (1.74% of loans) at Dec. 31, 2017. The increases in the allowance for loan losses as a percentage of loans from the prior and year-ago quarters were driven by increases in the Commercial Finance division. The change from the year-ago quarter also reflects an increase in specific reserves associated with non-accruals.

Purchase credit impaired (PCI) loans acquired as part of the OneWest acquisition are carried at a significant discount to the unpaid principal balance. At Dec. 31, 2018, PCI loans with an aggregate unpaid principal balance of $2.5 billion were carried at $1.7 billion, representing a 32% discount. The vast majority of the discount is related to our LCM portfolio in Consumer Banking. A significant portion of the portfolio is covered by a loss sharing agreement with the FDIC that expires in March 2019.

Non-accrual Loans
Non-accrual loans were $282 million (0.92% of loans) compared to $318 million (1.04% of loans) in the prior quarter and $221 million (0.76% of loans) in the year-ago quarter.

In Commercial Banking, non-accrual loans were $238 million (0.98% of loans), compared to $275 million (1.14% of loans) at Sep. 30, 2018 and $191 million (0.82% of loans) at Dec. 31, 2017. The decrease from the prior quarter was primarily driven by a loan sale in the Commercial Finance division, and the increase from the year-ago quarter was primarily driven by an increase in the Commercial Finance division.

In Consumer Banking, non-accrual loans were $38 million (0.59% of loans) at Dec. 31, 2018, compared to $35 million (0.55% of loans) at Sep. 30, 2018, and $20 million (0.34% of loans) at Dec. 31, 2017, primarily related to non-PCI loans in the LCM portfolio.

Commercial Banking

Earnings Summary*




4Q18 change from


($ in millions)

4Q18



3Q18



4Q17



3Q18




4Q17





























Interest income

$

349



$

339



$

315



$

10



3

%



$

34



11

%

Rental income on operating leases


230




264




253




(35)



-13

%




(23)



-9

%

Interest expense


193




190




139




2



1

%




54



39

%

Depreciation on operating lease equipment


79




78




74




1



2

%




5



7

%

Maintenance and other operating lease expenses


53




57




58




(4)



-7

%




(5)



-9

%

Net finance revenue


254




278




296




(25)



-9

%




(43)



-14

%

Other non-interest income


93




76




73




17



22

%




20



28

%

Provision for credit losses


28




39




29




(11)



-29

%




(1)



-3

%

Operating expenses


166




172




168




(6)



-4

%




(2)



-1

%

Goodwill impairment


0




0




256




0


NM





(256)



-100

%

Income (loss) before income taxes

$

153



$

143



$

(83)



$

10



7

%



$

236


NM





























Select Average Balances



























Average loans(1)

$

22,456



$

22,018



$

21,420



$

438



2

%



$

1,035



5

%

Average operating leases(1)

$

6,924



$

8,032



$

7,841



$

(1,108)



-14

%



$

(918)



-12

%

Average earning assets(2)

$

29,590



$

30,319



$

29,507



$

(729)



-2

%



$

83



0

%




























Key Metrics



























Pre-tax ROAEA


2.07

%



1.89

%



-1.13

%


18bps







NM





Net finance margin


3.43

%



3.67

%



4.01

%


-24bps







-59bps





New business volume

$

3,195



$

2,770



$

2,902



$

424



15

%



$

293



10

%

Net efficiency ratio


47.5

%



48.2

%



45.1

%


-68bps







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 quarter included a $25 million gain on the sale of NACCO. Pre-tax earnings in the prior and year-ago quarters included a benefit from the suspension of depreciation expense related to NACCO of $9 million. Pre-tax earnings in the year-ago quarter included a goodwill impairment of $256 million. Excluding noteworthy items, pre-tax earnings was $128 million down from $135 million in the prior quarter, as lower rental income and lower other non-interest income were partially offset by higher income on loans, lower operating expenses and lower credit costs. Compared to the year-ago quarter, pre-tax earnings excluding noteworthy items decreased from $164 million, primarily driven by lower rental income, an increase in funding costs, lower purchase accounting accretion and lower other non-interest income. The sale of NACCO early in the current quarter contributed to the decreases in pre-tax earnings excluding noteworthy items from both the prior and year-ago quarters.

Net Finance Revenue and Margin
Excluding noteworthy items, net finance revenue decreased $16 million from the prior quarter. The decline was primarily driven by rental income contribution from NACCO and a lease prepayment in the prior quarter and higher interest expense, partially offset by an increase in interest income from higher interest rates on floating rate earning assets. Compared to the year-ago quarter, excluding noteworthy items, net finance revenue decreased $34 million, primarily due to rental income contribution from NACCO in the year-ago quarter, higher interest expense and lower purchase accounting accretion, partially offset by an increase in interest income from higher interest rates on earning assets. Purchase accounting accretion in the Commercial Banking segment was $6 million in the current quarter and continued to trend down.

Net finance margin excluding noteworthy items declined 13 bps compared to the prior quarter driven by increased funding costs and the NACCO sale and 46 bps compared to the year-ago quarter due to increased funding costs, partially offset by benefits from higher interest rates.

Loans and Leases
Average loans and leases, which comprise the vast majority of average earning assets, was $29.4 billion, down 2% from the prior quarter, driven by the sale of NACCO early in the current quarter, partially offset by growth in Commercial Finance, Real Estate Finance and Business Capital. Compared to the year-ago quarter, average loans and leases were up slightly, as growth in Commercial Finance, North American Rail and Business Capital were offset by a decline in Real Estate Finance and the sale of NACCO.

New lending and leasing volume in the current quarter was $3.2 billion, representing a 15% increase compared to the prior quarter, primarily driven by origination growth in Business Capital, Commercial Finance and Real Estate Finance. Compared to the year-ago quarter, new lending and leasing volume increased 10%, driven by growth in Business Capital, Commercial Finance and Real Estate Finance.

Factoring volume of $8.3 billion was up 3% from the prior quarter, primarily driven by continued volume growth in the technology industry, offset by seasonality. Compared to the year-ago quarter, factoring volume was up 7% driven primarily by increased volume in the consumer products and technology industries.

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, partially offset by a significant increase in prepayments.
  • Gross yields increased 4 basis points from the prior quarter, primarily driven by higher interest rates and prepayment benefits.

Rail

  • Average loans and leases of $6.5 billion declined from the prior quarter primarily due to the sale of NACCO, which represented $1.2 billion in assets.
  • North America railcar utilization remained at 98%.
  • Gross yields declined 41 basis points from the prior quarter due to a customer lease prepayment in the prior quarter, the NACCO sale and continued lease renewal rates below expiring rates.

Real Estate Finance

  • Average loans and leases increased 2% compared to the prior quarter, as funded volume increased 25% but was offset by a significant increase in the prepayment rate.
  • Gross yields increased 20 basis points from the prior quarter, driven by higher interest rates and higher prepayment benefits during the current quarter.

Business Capital

  • Average loans and leases increased 3% compared to the prior quarter and increased 9% compared to the year-ago quarter.
  • Gross yields increased by 23 bps compared to the prior quarter, driven by improvements in Equipment Finance and Commercial Services.

Consumer Banking

Earnings Summary*




4Q18 change from


($ in millions)

4Q18



3Q18



4Q17



3Q18




4Q17





























Interest income

$

90



$

79



$

84



$

11



14

%



$

5



6

%

Interest benefit


(40)




(42)




(20)




1



3

%




(21)


NM


Net finance revenue


130




121




104




9



8

%




26



25

%

Other non-interest income


4




(18)




13




22


NM





(9)



-69

%

Provision for credit losses


4




(1)




2




4


NM





2



94

%

Operating expenses


91




89




104




2



2

%




(13)



-12

%

Income before income taxes

$

40



$

15



$

12



$

25


NM




$

28


NM





























Select Average Balances



























Average loans(1)

$

6,472



$

6,364



$

6,728



$

108



2

%



$

(256)



-4

%

Average earning assets

$

6,501



$

6,433



$

6,886



$

68



1

%



$

(385)



-6

%




























Key Metrics



























Pre-tax ROAEA


2.46

%



0.90

%



0.69

%


NM







NM





Net finance margin


8.00

%



7.50

%



6.04

%


50bps







NM





New business volume

$

381



$

360



$

422



$

21



6

%



$

(41)



-10

%

Net efficiency ratio


64.1

%



82.2

%



84.4

%



-18.1

%







-20.3

%










(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 prior quarter included a $21 million charge in other non-interest income related to an impairment of the indemnification asset due to amounts deemed uncollectable for the remaining indemnification period under our loss share agreement that expires in March 2019 for certain covered loans in our LCM portfolio. Excluding noteworthy items, pre-tax earnings was $40 million compared to $36 million in the prior quarter, driven by an increase in interest income from an increase in net purchase accounting accretion and growth in the residential mortgage portfolio in Other Consumer Banking, partially offset by an increase in the provision for credit losses. Compared to the year-ago quarter, pre-tax earnings excluding noteworthy items increased by $28 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 and lower operating expenses, partially offset by a decrease in other non-interest income in the LCM portfolio from gains in the year-ago quarter in the reverse mortgage portfolio.

Net Finance Revenue
Net finance revenue was $130 million, an 8% increase from the prior quarter primarily due to higher net purchase accounting accretion in the LCM portfolio and growth in the residential mortgage portfolio. The increase in the net purchase accounting accretion reflects both a reduction in the negative yield on the indemnification asset and higher purchase accounting accretion. Net finance revenue increased by $26 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 and higher net purchase accounting accretion were partially offset by lower interest income from LCM due to the sale of the reverse mortgage portfolio.

Average Loans
Average total loans increased compared to the prior quarter, as new business volume in the Other Consumer Banking division was partially offset by run-off of the LCM portfolio. Compared to the year-ago quarter, average total loans decreased 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.

Corporate & Other:

Earnings Summary*




4Q18 change from


($ in millions)

4Q18



3Q18



4Q17



3Q18




4Q17





























Interest income

$

52



$

54



$

44



$

(2)



-3

%



$

9



20

%

Interest expense


63




64




47




(1)



-2

%




16



33

%

Net finance revenue


(11)




(10)




(4)




(1)



-6

%




(7)


NM


Other non-interest income


(54)




16




50




(70)


NM





(104)


NM


Operating expenses and loss on debt extinguishment and deposit
redemption


16




3




35




12


NM





(19)



-55

%

(Loss) income before income taxes

$

(80)



$

3



$

12



$

(83)


NM




$

(92)


NM





























Select Average Balances



























Average earning assets

$

7,928



$

8,546



$

7,981



$

(618)



-7

%



$

(53)



-1

%




























Key Metrics



























Pre-tax ROAEA


-4.05

%



0.13

%



0.60

%


NM







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 results in the current and prior quarters included debt extinguishment costs of $16 million and $3 million, respectively. The current quarter also includes a $69 million net charge related to the termination of our Dutch total return swap facility. The year-ago quarter included a $29 million benefit related to the cumulative effect of an accounting policy change for LIHTC investments, which was more than offset by a related $38 million expense in the provision for income taxes. The year-ago quarter also included $32 million in restructuring charges.

Discontinued Operations:
Discontinued operations in the fourth quarter consisted of our Business Air portfolio and residual activity from the Financial Freedom business, including indemnification reserves.

Income in the current quarter from Discontinued Operations was negligible. The prior quarter income was $2 million, and the year-ago quarter loss was $5 million.

Business Air loans and leases totaled $54 million at Dec. 31, 2018, down from $111 million at Sep. 30, 2018 and $184 million at Dec. 31, 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 Dec. 31, 2018, Financial Freedom loans totaled $194 million and related secured borrowings totaled $195 million.

Conference Call and Webcast
The Company will host a conference call today, Jan. 29, 2019, to discuss its fourth quarter and full year 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 1300965

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 Mar. 15, 2019, 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 10127624, or at cit.com/investor under Presentations & Events.

About CIT
CIT is a leading national bank focused on empowering businesses and personal savers with the financial agility to navigate their goals. CIT Group Inc. (NYSE: CIT) is a financial holding company with over a century of experience, approximately $50 billion in assets as of Dec. 31, 2018, and operates a principal bank subsidiary, CIT Bank, N.A. (Member FDIC, Equal Housing Lender). The company's commercial banking segment includes commercial financing, real estate financing, equipment financing, factoring and railcar financing. CIT's consumer banking segment includes its national online bank, CIT Bank, and a Southern California branch bank, OneWest Bank. Discover more at cit.com/about.

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 (vi) 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 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.
2 Core portfolios is total loans and leases net of credit balances of factoring clients, NACCO, legacy consumer mortgages (LCM) and non-strategic portfolios (NSP).
3 Full year operating expenses excludes noteworthy items and intangible asset amortization.
4 The calculation of ROTCE excludes noteworthy items and is based on non-GAAP income from continuing operations. See "Non-GAAP Measurements" at the end of this press release and starting on page 26 for reconciliation of non-GAAP financial information.
5 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.
6 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.
7 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.
8 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



Years Ended



December 31,



September 30,



December 31,



December 31,



2018



2018



2017



2018



2017


Interest income




















Interest and fees on loans

$

438.0



$

417.4



$

401.2



$

1,671.8



$

1,638.1


Other interest and dividends


54.0




56.2




46.5




218.6




197.5


Total interest income


492.0




473.6




447.7




1,890.4




1,835.6


Interest expense




















Interest on borrowings


85.9




90.8




76.6




354.7




344.4


Interest on deposits


129.6




123.1




92.1




460.4




373.3


Total interest expense


215.5




213.9




168.7




815.1




717.7


Net interest revenue


276.5




259.7




279.0




1,075.3




1,117.9


Provision for credit losses


31.2




38.1




30.4




171.0




114.6


Net interest revenue, after credit provision


245.3




221.6




248.6




904.3




1,003.3


Non-interest income




















Rental income on operating lease equipment


229.8




264.3




252.6




1,009.0




1,007.4


Other non-interest income(1)


47.5




86.2




137.2




373.8




364.2


Total non-interest income


277.3




350.5




389.8




1,382.8




1,371.6


Non-interest expenses




















Depreciation on operating lease equipment


79.5




78.0




74.3




311.1




296.3


Maintenance and other operating lease expenses


52.9




56.6




57.9




230.4




222.9


Operating expenses(2)


257.9




263.3




304.0




1,070.0




1,188.5


Goodwill impairment


-




-




255.6




-




255.6


Loss on debt extinguishment and deposit redemption


15.7




3.5




1.7




38.6




220.0


Total non-interest expenses


406.0




401.4




693.5




1,650.1




2,183.3


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


116.6




170.7




(55.1)




637.0




191.6


Provision (benefit) for income taxes


24.9




41.3




27.7




164.9




(67.8)


Income (loss) from continuing operations


91.7




129.4




(82.8)




472.1




259.4






















Discontinued operations




















Income (loss) from discontinued operations, net of taxes


0.1




2.1




(5.2)




(8.7)




90.2


Gain (loss) on sale of discontinued operations, net of taxes


-




-




-




(16.3)




118.6


Income (loss) from discontinued operations, net of taxes


0.1




2.1




(5.2)




(25.0)




208.8






















Net income (loss)

$

91.8



$

131.5



$

(88.0)



$

447.1



$

468.2


Less: preferred stock dividends


9.5




-




9.8




18.9




9.8


Net income (loss) available to common shareholders

$

82.3



$

131.5



$

(97.8)



$

428.2



$

458.4


Income (loss) from continuing operations available to common shareholders

$

82.2



$

129.4



$

(92.6)



$

453.2



$

249.6






















Basic income (loss) per common share




















Income (loss) from continuing operations

$

0.79



$

1.15



$

(0.70)



$

3.85



$

1.54


Income (loss) from discontinued operations, net of taxes


0.00




0.02




(0.04)




(0.21)




1.28


Basic income (loss) per common share

$

0.79



$

1.17



$

(0.74)



$

3.64



$

2.82


Average number of common shares - basic (thousands)


104,110




112,842




131,343




117,653




162,290






















Diluted income (loss) per common share




















Income (loss) from continuing operations

$

0.78



$

1.13



$

(0.70)



$

3.82



$

1.52


Income (loss) from discontinued operations, net of taxes


0.00




0.02




(0.04)




(0.21)




1.28


Diluted income (loss) per common share

$

0.78



$

1.15



$

(0.74)



$

3.61



$

2.80


Average number of common shares - diluted (thousands)


105,149




114,007




131,343




118,777




163,950






























































(1)OTHER NON-INTEREST INCOME




















Fee revenues

$

21.6



$

28.2



$

30.3



$

103.5



$

113.6


Factoring commissions


26.1




27.2




26.7




102.4




102.9


Gains on leasing equipment, net of impairments


18.0




13.6




9.1




59.5




43.1


BOLI income


5.9




6.5




5.8




25.5




7.6


Gains on investment securities, net of impairments


4.7




3.6




11.4




15.3




28.9


Other revenues


(28.8)




7.1




53.9




67.6




68.1


Total other non-interest income

$

47.5



$

86.2



$

137.2



$

373.8



$

364.2






















(2)OPERATING EXPENSES




















Compensation and benefits

$

130.1



$

137.3



$

138.6



$

558.4



$

566.3


Technology


34.1




32.3




30.7




131.5




127.9


Professional fees


19.5




16.7




28.8




82.7




132.3


Insurance


14.0




15.9




15.7




68.3




84.7


Net occupancy expense


17.3




16.1




16.7




65.6




67.8


Advertising and marketing


10.6




10.6




12.8




47.6




42.2


Other expenses


26.4




28.4




22.7




92.0




89.6


Operating expenses, excluding restructuring costs and intangible asset

amortization


252.0




257.3




266.0




1,046.1




1,110.8


Intangible asset amortization


5.9




6.0




6.1




23.9




24.7


Restructuring costs


-




-




31.9




-




53.0


Total operating expenses

$

257.9



$

263.3



$

304.0



$

1,070.0



$

1,188.5


 

 

CIT GROUP INC. AND SUBSIDIARIES


Unaudited Consolidated Balance Sheets


(dollars in millions, except per share data)















December 31,



September 30,



December 31,



2018



2018



2017














Assets












Total cash and deposits

$

1,795.6



$

1,367.5



$

1,718.7


Securities purchased under agreement to resell


400.0




200.0




150.0


Investment securities


6,233.8




6,339.5




6,469.9


Assets held for sale


88.4




1,380.5




2,263.1


Loans


30,795.4




30,495.8




29,113.9


Allowance for loan losses


(489.7)




(477.4)




(431.1)


Loans, net of allowance for loan losses


30,305.7




30,018.4




28,682.8


Operating lease equipment, net


6,970.6




6,888.7




6,738.9


Goodwill


369.9




369.9




369.9


Bank owned life insurance


814.1




808.2




788.6


Other assets*


1,309.5




1,562.0




1,595.5


Assets of discontinued operations


249.8




327.7




501.3


Total assets

$

48,537.4



$

49,262.4



$

49,278.7














Liabilities












Deposits

$

31,239.5



$

30,825.0



$

29,569.3


Credit balances of factoring clients


1,674.4




1,672.4




1,468.6


Other liabilities**


1,261.1




1,461.9




1,437.1


Borrowings












Senior unsecured


3,413.0




3,842.3




3,737.5


Structured financings


710.4




1,286.6




1,541.4


FHLB advances


3,600.0




3,150.0




3,695.5


Subordinated debt


395.4




395.3




-


Total borrowings


8,118.8




8,674.2




8,974.4


Liabilities of discontinued operations


297.0




308.6




509.3


Total liabilities


42,590.8




42,942.1




41,958.7


Equity












Preferred stock


325.0




325.0




325.0














Common stock


1.6




2.1




2.1


Paid-in capital


6,810.8




8,831.3




8,798.1


Retained earnings


1,924.4




2,182.3




1,906.5


Accumulated other comprehensive loss


(178.3)




(199.4)




(86.5)


Treasury stock, at cost


(2,936.9)




(4,821.0)




(3,625.2)


Total common stockholders' equity


5,621.6




5,995.3




6,995.0


Total equity


5,946.6




6,320.3




7,320.0


Total liabilities and equity

$

48,537.4



$

49,262.4



$

49,278.7














Book Value Per Common Share












Book value per common share

$

55.70



$

54.22



$

53.25


Tangible book value per common share

$

51.15



$

50.02



$

49.58


Outstanding common shares (in thousands)


100,920




110,566




131,353






































*OTHER ASSETS












Tax credit investments and investments in unconsolidated subsidiaries

$

313.9



$

308.6



$

247.6


Property, furniture and fixtures


160.0




170.8




173.9


Current and deferred federal and state tax assets


137.0




183.8




205.2


Intangible assets


89.2




95.0




113.0


Counterparty receivables


57.0




202.0




241.3


Indemnification assets


10.8




27.2




142.4


Other


541.6




574.6




472.1


Total other assets

$

1,309.5



$

1,562.0



$

1,595.5














**OTHER LIABILITIES












Accrued expenses and accounts payable

$

561.5



$

576.4



$

584.8


Current and deferred taxes payable


106.9




229.5




204.3


Accrued interest payable


91.7




59.4




86.6


Fair value of derivative financial instruments


79.7




129.1




87.5


Other


421.3




467.5




473.9


Total other liabilities

$

1,261.1



$

1,461.9



$

1,437.1


 

 

CIT GROUP INC. AND SUBSIDIARIES


Average Balances and Rates


(dollars in millions)



























Quarters Ended



December 31, 2018



September 30, 2018



December 31, 2017



Average







Average







Average







Balance



Rate



Balance



Rate



Balance



Rate


Assets
























Interest-bearing deposits

$

1,791.3




1.70

%


$

2,466.4




1.90

%


$

2,270.2




1.57

%

Investment securities and securities purchased under agreement to resell


6,426.4




2.89

%



6,415.7




2.77

%



6,067.9




2.48

%

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


28,954.3




6.09

%



28,408.7




6.02

%



28,225.3




5.91

%

Total interest earning assets


37,172.0




5.32

%



37,290.8




5.19

%



36,563.4




5.07

%

Operating lease equipment, net (including held for sale)


6,923.5




5.63

%



8,031.8




6.46

%



7,841.0




6.14

%

Indemnification assets


17.8




-60.67

%



54.5




-74.86

%



157.7




-40.33

%

Average earning assets ("AEA")


44,113.3




5.34

%



45,377.1




5.32

%



44,562.1




5.10

%

Non-interest earning assets
























Cash and due from banks


171.6








172.7








403.4






Allowance for loan losses


(479.4)








(468.9)








(424.7)






All other non-interest-bearing assets


2,594.9








2,717.2








2,793.5






Assets of discontinued operations


300.3








352.9








532.6






Total Average Assets

$

46,700.7







$

48,151.0







$

47,866.9






Liabilities
























Interest-bearing deposits and borrowings
























Deposits

$

29,300.6




1.77

%


$

29,735.4




1.65

%


$

28,133.7




1.31

%

Borrowings


8,131.9




4.23

%



8,692.2




4.18

%



8,630.9




3.55

%

Total interest-bearing liabilities


37,432.5




2.30

%



38,427.6




2.23

%



36,764.6




1.84

%

Non-interest bearing deposits


1,563.6








1,503.2








1,501.3






Other non-interest-bearing liabilities


1,337.8








1,473.6








1,618.3






Liabilities of discontinued operations


299.7








327.9








541.9






Stockholders' equity


6,067.1








6,418.7








7,440.8






Total Average Liabilities and Shareholders' Equity

$

46,700.7







$

48,151.0







$

47,866.9































Years Ended











December 31, 2018



December 31, 2017











Average







Average















Balance



Rate



Balance



Rate










Assets
























Interest-bearing deposits

$

2,399.6




1.76

%


$

5,291.5




1.09

%









Investment securities and securities purchased under agreement to resell


6,354.3




2.77

%



5,352.3




2.61

%









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


28,644.8




5.97

%



28,281.6




5.96

%









Total interest earning assets


37,398.7




5.16

%



38,925.4




4.84

%









Operating lease equipment, net (including held for sale)


7,738.7




6.04

%



7,685.0




6.35

%









Indemnification assets


77.0




-51.43

%



241.7




-19.45

%









Average earning assets ("AEA")


45,214.4




5.21

%



46,852.1




4.96

%









Non-interest earning assets
























Cash and due from banks


203.9








587.1














Allowance for loan losses


(456.6)








(430.4)














All other non-interest-bearing assets


2,646.8








2,398.0














Assets of discontinued operations


386.5








3,752.0














Total Average Assets

$

47,995.0







$

53,158.8














Liabilities
























Interest-bearing deposits and borrowings
























Deposits


29,266.1




1.57

%



29,538.2




1.26

%









Borrowings


8,824.0




4.02

%



10,674.0




3.23

%









Total interest-bearing liabilities


38,090.1




2.14

%



40,212.2




1.78

%









Non-interest-bearing deposits


1,493.3








1,450.0














Other non-interest bearing liabilities


1,397.5








1,645.0














Liabilities of discontinued operations


386.0








1,303.1














Noncontrolling interests


-








0.2














Stockholders' equity


6,628.1








8,548.3















$

47,995.0







$

53,158.8














 

 

CIT GROUP INC. AND SUBSIDIARIES


Average Loans and Leases


(dollars in millions)















Quarters Ended



December 31,



September 30,



December 31,



2018



2018



2017


Commercial Banking












Commercial Finance












Loans

$

10,286.1



$

10,022.6



$

9,561.8


Assets held for sale


37.5




107.1




92.8


Total loans and leases


10,323.6




10,129.7




9,654.6














Rail












Loans


85.2




83.5




81.5


Operating lease equipment, net


6,401.7




6,348.2




6,254.3


Assets held for sale


-




1,208.6




1,147.9


Total loans and leases


6,486.9




7,640.3




7,483.7














Real Estate Finance












Loans


5,461.3




5,387.3




5,609.2


Assets held for sale


22.6




11.2




5.8


Total loans and leases


5,483.9




5,398.5




5,615.0














Business Capital












Loans (net of credit balances of factoring clients)


6,552.4




6,356.3




6,047.2


Operating lease equipment, net


521.8




513.8




460.7


Assets held for sale


10.4




10.8




-


Total loans and leases


7,084.6




6,880.9




6,507.9














Total Segment












Loans (net of credit balances of factoring clients)


22,385.0




21,849.7




21,299.7


Operating lease equipment, net


6,923.5




6,862.0




6,715.0


Assets held for sale


70.5




1,337.7




1,246.5


Total loans and leases


29,379.0




30,049.4




29,261.2














Consumer Banking












Legacy Consumer Mortgages












Loans


2,849.4




2,981.0




3,414.5


Assets held for sale


-




-




860.7


Total loans


2,849.4




2,981.0




4,275.2














Other Consumer Banking












Loans


3,616.6




3,370.2




2,447.6


Assets held for sale


6.2




12.7




5.1


Total loans


3,622.8




3,382.9




2,452.7














Total Segment












Loans


6,466.0




6,351.2




5,862.1


Assets held for sale


6.2




12.7




865.8


Total loans


6,472.2




6,363.9




6,727.9














Non-Strategic Portfolios












Assets held for sale


26.6




27.2




77.2


  Total loans and leases


26.6




27.2




77.2














Total loans (net of credit balances of factoring clients)


28,851.0




28,200.9




27,161.8


Total operating lease equipment, net


6,923.5




6,862.0




6,715.0


Total assets held for sale


103.3




1,377.6




2,189.5


Total loans and leases

$

35,877.8



$

36,440.5



$

36,066.3


 

 

CIT GROUP INC. AND SUBSIDIARIES

Credit Metrics

(dollars in millions)














Quarters Ended


December 31, 2018


September 30, 2018


December 31, 2017

Gross Charge-offs to Average Loans












Commercial Banking

$30.1


0.50%


$29.4


0.50%


$22.8


0.40%

Consumer Banking

1.4


0.08%


1.4


0.09%


0.5


0.03%

Total CIT

$31.5


0.41%


$30.8


0.41%


$23.3


0.32%


























Years Ended December 31,






December 31, 2018


December 31, 2017





Gross Charge-offs to Average Loans












Commercial Banking

$138.7


0.59%


$115.2


0.51%





Consumer Banking

4.1


0.07%


22.5


0.35%





Total CIT

$142.8


0.48%


$137.7


0.47%






























Quarters Ended


December 31, 2018


September 30, 2018


December 31, 2017

Net Charge-offs to Average Loans












Commercial Banking

$22.9


0.38%


$24.7


0.42%


$18.0


0.32%

Consumer Banking

1.3


0.08%


1.3


0.08%


0.3


0.02%

Total CIT

$24.2


0.32%


$26.0


0.35%


$18.3


0.26%


























Years Ended December 31,






December 31, 2018


December 31, 2017





Net Charge-offs to Average Loans












Commercial Banking

$112.1


0.48%


$94.1


0.41%





Consumer Banking

3.3


0.05%


21.1


0.32%





Total CIT

$115.4


0.39%


$115.2


0.39%





























Non-accruing Loans to Loans(1)

December 31, 2018


September 30, 2018


December 31, 2017

Commercial Banking

$237.9


0.98%


$274.7


1.14%


$190.8


0.82%

Consumer Banking

38.3


0.59%


35.1


0.55%


20.3


0.34%

Non-Strategic Portfolios

6.1


-


8.3


-


9.8


-

Total CIT

$282.3


0.92%


$318.1


1.04%


$220.9


0.76%


























Quarters Ended








December 31,


September 30,


December 31,








2018


2018


2017







Provision for Credit Losses












Specific allowance - impaired loans

$3.7


$6.9


$(9.6)







Non-specific allowance

27.5


31.2


40.0







Totals

$31.2


$38.1


$30.4
































Years Ended December 31,










2018


2017









Provision for Credit Losses












Specific allowance - impaired loans

$21.4


$(3.3)









Non-specific allowance

149.6


117.9









Totals

$171.0


$114.6


































December 31,


September 30,


December 31,








2018


2018


2017







Allowance for Loan Losses












Specific allowance - impaired loans

$47.4


$43.7


$26.0







Non-specific allowance

442.3


433.7


405.1







Totals

$489.7


$477.4


$431.1



















Allowance for loan losses as a percentage of total loans

1.59%


1.57%


1.48%







Allowance for loan losses as a percent of loans/Commercial

1.90%


1.87%


1.74%



















(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



December 31, 2018



September 30,
2018



























Commercial
Banking



Consumer
Banking



Non-
Strategic
Portfolios



Corporate
and Other



Total



Total


Interest income
























Interest and fees on loans

$

347.4



$

89.7



$

0.9



$

-



$

438.0



$

417.4


Other interest and dividends


1.4




-




0.2




52.4




54.0




56.2


Total interest income


348.8




89.7




1.1




52.4




492.0




473.6


Interest expense
























Interest on borrowings


189.7




(145.9)




-




42.1




85.9




90.8


Interest on deposits


3.0




105.6




-




21.0




129.6




123.1


Total interest expense


192.7




(40.3)




-




63.1




215.5




213.9


Net interest revenue


156.1




130.0




1.1




(10.7)




276.5




259.7


Provision for credit losses


27.7




3.5




-




-




31.2




38.1


Net interest revenue, after credit provision


128.4




126.5




1.1




(10.7)




245.3




221.6


Non-interest income
























Rental income on operating lease equipment


229.8




-




-




-




229.8




264.3


Other non-interest income


93.3




4.1




4.0




(53.9)




47.5




86.2


Total non-interest income


323.1




4.1




4.0




(53.9)




277.3




350.5


Non-interest expenses
























Depreciation on operating lease equipment


79.5




-




-




-




79.5




78.0


Maintenance and other operating lease expenses


52.9




-




-




-




52.9




56.6


Operating expenses


166.1




90.7




1.2




(0.1)




257.9




263.3


Loss on debt extinguishment and deposit redemptions


-




-




-




15.7




15.7




3.5


Total non-interest expenses


298.5




90.7




1.2




15.6




406.0




401.4


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

$

153.0



$

39.9



$

3.9



$

(80.2)



$

116.6



$

170.7



























Years Ended



December 31, 2018



December 31,
2017



























Commercial
Banking



Consumer
Banking



Non-
Strategic
Portfolios



Corporate
and Other



Total



Total


Interest income
























Interest and fees on loans

$

1,326.8



$

338.9



$

5.8



$

0.3



$

1,671.8



$

1,638.1


Other interest and dividends


6.2




-




1.0




211.4




218.6




197.5


Total interest income


1,333.0




338.9




6.8




211.7




1,890.4




1,835.6


Interest expense
























Interest on borrowings


701.8




(500.9)




4.3




149.5




354.7




344.4


Interest on deposits


14.5




357.4




-




88.5




460.4




373.3


Total interest expense


716.3




(143.5)




4.3




238.0




815.1




717.7


Net interest revenue


616.7




482.4




2.5




(26.3)




1,075.3




1,117.9


Provision for credit losses


167.1




3.9




-




-




171.0




114.6


Net interest revenue, after credit provision


449.6




478.5




2.5




(26.3)




904.3




1,003.3


Non-interest income
























Rental income on operating lease equipment


1,009.0




-




-




-




1,009.0




1,007.4


Other non-interest income


320.8




35.0




17.5




0.5




373.8




364.2


Total non-interest income


1,329.8




35.0




17.5




0.5




1,382.8




1,371.6


Non-interest expenses
























Depreciation on operating lease equipment


311.1




-




-




-




311.1




296.3


Maintenance and other operating lease expenses


230.4




-




-




-




230.4




222.9


Operating expenses


692.9




369.3




7.8




-




1,070.0




1,188.5


Goodwill impairment


-




-




-




-




-




255.6


Loss on debt extinguishment and deposit redemptions


-




-




-




38.6




38.6




220.0


Total non-interest expenses


1,234.4




369.3




7.8




38.6




1,650.1




2,183.3


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

$

545.0



$

144.2



$

12.2



$

(64.4)



$

637.0



$

191.6


 

 

CIT GROUP INC. AND SUBSIDIARIES


Segment Margin


(dollars in millions)























Quarters Ended



Years Ended



December 31,



September 30,



December 31,



December 31,



2018



2018



2017



2018



2017






















Commercial Banking




















Average Earning Assets (AEA)




















Commercial Finance

$

10,402.3



$

10,230.6



$

9,748.6



$

10,217.1



$

9,867.0


Rail


6,585.4




7,774.6




7,583.2




7,462.8




7,460.2


Real Estate Finance


5,483.9




5,398.5




5,615.0




5,491.7




5,606.2


Business Capital


7,118.5




6,915.7




6,560.5




6,830.0




6,336.7


Total

$

29,590.1



$

30,319.4



$

29,507.3



$

30,001.6



$

29,270.1






















Net Finance Revenue




















Commercial Finance

$

84.0



$

84.2



$

96.1



$

337.7



$

389.6


Rail


46.1




77.7




78.5




265.3




318.8


Real Estate Finance


42.1




40.2




48.2




171.7




199.4


Business Capital


81.3




76.2




73.3




309.5




310.7


Total

$

253.5



$

278.3



$

296.1



$

1,084.2



$

1,218.5






















Gross Yield




















Commercial Finance


5.82

%



5.78

%



5.61

%



5.64

%



5.47

%

Rail


11.10

%



11.51

%



11.25

%



11.24

%



11.59

%

Real Estate Finance


5.80

%



5.60

%



5.18

%



5.59

%



5.18

%

Business Capital


9.27

%



9.04

%



8.79

%



9.08

%



8.84

%

Total


7.82

%



7.96

%



7.69

%



7.81

%



7.71

%





















Net Finance Margin




















Commercial Finance


3.23

%



3.29

%



3.94

%



3.31

%



3.95

%

Rail


2.80

%



4.00

%



4.14

%



3.55

%



4.27

%

Real Estate Finance


3.07

%



2.98

%



3.43

%



3.13

%



3.56

%

Business Capital


4.57

%



4.41

%



4.47

%



4.53

%



4.90

%

Total


3.43

%



3.67

%



4.01

%



3.61

%



4.16

%





















Consumer Banking




















Average Earning Assets (AEA)




















Other Consumer Banking

$

3,633.5



$

3,397.7



$

2,452.7



$

3,215.5



$

2,266.1


Legacy Consumer Mortgages


2,867.2




3,035.5




4,432.9




3,465.2




4,787.9


Total

$

6,500.7



$

6,433.2



$

6,885.6



$

6,680.7



$

7,054.0






















Net Finance Revenue




















Other Consumer Banking

$

91.1



$

90.3



$

62.4



$

339.6



$

219.9


Legacy Consumer Mortgages


38.9




30.3




41.6




142.8




210.0


Total

$

130.0



$

120.6



$

104.0



$

482.4



$

429.9






















Gross Yield




















Other Consumer Banking


3.78

%



3.66

%



3.52

%



3.66

%



3.49

%

Legacy Consumer Mortgages


7.72

%



6.31

%



5.66

%



6.38

%



6.24

%

Total


5.52

%



4.91

%



4.90

%



5.07

%



5.36

%





















Net Finance Margin




















Other Consumer Banking


10.03

%



10.63

%



10.18

%



10.56

%



9.70

%

Legacy Consumer Mortgages


5.43

%



4.01

%



3.75

%



4.12

%



4.39

%

Total


8.00

%



7.50

%



6.04

%



7.22

%



6.09

%





















Non-Strategic Portfolios




















AEA

$

94.3



$

78.6



$

188.0



$

112.3



$

277.0


Net Finance Revenue


1.1




0.6




2.9




2.5




7.7


Gross Yield


4.67

%



7.12

%



10.85

%



6.06

%



8.27

%

Net Finance Margin


4.67

%



3.05

%



6.17

%



2.23

%



2.78

%





















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



Years  Ended



December 31,



September 30,



December 31,



December 31,


Total Net Revenues(1)

2018



2018



2017



2018



2017


Interest income

$

492.0



$

473.6



$

447.7



$

1,890.4



$

1,835.6


Rental income on operating lease equipment


229.8




264.3




252.6




1,009.0




1,007.4


  Finance revenue (Non-GAAP)


721.8




737.9




700.3




2,899.4




2,843.0


Interest expense


215.5




213.9




168.7




815.1




717.7


Depreciation on operating lease equipment


79.5




78.0




74.3




311.1




296.3


Maintenance and other operating lease expenses


52.9




56.6




57.9




230.4




222.9


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


373.9




389.4




399.4




1,542.8




1,606.1


Other non-interest income


47.5




86.2




137.2




373.8




364.2


Total net revenues (Non-GAAP)

$

421.4



$

475.6



$

536.6



$

1,916.6



$

1,970.3






















NFR (Non-GAAP)

$

373.9



$

389.4



$

399.4



$

1,542.8



$

1,606.1


Suspended depreciation on assets HFS


-




(8.6)




(8.8)




(26.5)




(16.6)


Excess interest costs over interest income from Commercial Air proceeds usage


-




-




-




-




23.4


Interest on excess cash


-




-




-




-




(9.1)


Adjusted NFR (Non-GAAP)

$

373.9



$

380.8



$

390.6



$

1,516.3



$

1,603.8


NFR as a % of AEA


3.39

%



3.43

%



3.59

%



3.41

%



3.43

%

NFR as a % of AEA, adjusted for noteworthy items


3.39

%



3.36

%



3.51

%



3.35

%



3.49

%





















Net Operating Lease Revenues(2)




















Rental income on operating leases

$

229.8



$

264.3



$

252.6



$

1,009.0



$

1,007.4


Depreciation on operating lease equipment


79.5




78.0




74.3




311.1




296.3


Maintenance and other operating lease expenses


52.9




56.6




57.9




230.4




222.9


Net operating lease revenue (Non-GAAP)

$

97.4



$

129.7



$

120.4



$

467.5



$

488.2






















Operating Expenses




















Operating expenses

$

257.9



$

263.3



$

304.0



$

1,070.0



$

1,188.5


Intangible asset amortization


5.9




6.0




6.1




23.9




24.7


Restructuring costs


-




-




31.9




-




53.0


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

$

252.0



$

257.3



$

266.0



$

1,046.1



$

1,110.8






















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


2.29

%



2.27

%



2.39

%



2.31

%



2.42

%





















Total Net Revenue (Non-GAAP)

$

421.4



$

475.6



$

536.6



$

1,916.6



$

1,970.3


Suspended depreciation on assets HFS


-




(8.6)




(8.8)




(26.5)




(16.6)


Financial Freedom Transaction impairments on reverse mortgage related assets


-




-




-




-




26.8


LIHTC Method change


-




-




(29.4)




-




(29.4)


Net costs of excess liquidity


-




-




-




-




14.3


CTA charge


-




-




-




-




8.1


Gain and other revenues from sale of reverse mortgage portfolio


-




-




-




(29.3)




-


Impairment of LCM indemnification asset


-




21.2




-




21.2




-


Release of valuation reserve on AHFS


-




(10.6)




-




(10.6)




-


TRS termination charge


69.5




-




-




69.5






NACCO gain on sale


(25.1)




-








(25.1)






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

$

465.8



$

477.6



$

498.4



$

1,915.8



$

1,973.5


Net Efficiency Ratio(5) (Non-GAAP)


59.8

%



54.1

%



49.6

%



54.6

%



56.4

%

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


54.1

%



53.9

%



53.4

%



54.6

%



56.3

%





















Other non-interest income

$

47.5



$

86.2



$

137.2



$

373.8



$

364.2


Financial Freedom Transaction impairments on reverse mortgage related assets


-




-




-




-




26.8


CTA charge


-




-




-




-




8.1


Gain and other revenues from sale of reverse mortgage portfolio


-




-




-




(29.3)




-


Impairment of LCM indemnification asset balance


-




21.2




-




21.2




-


Release of valuation reserve on AHFS


-




(10.6)




-




(10.6)




-


LIHTC Method change


-




-




(29.4)




-




(29.4)


TRS termination charge


69.5




-




-




69.5




-


NACCO gain on sale


(25.1)




-




-




(25.1)