CIT Group swung to a profit in the second quarter as the Livingston, N.J., company continued its transition from a specialty lender to a more traditional commercial bank.
The $50 billion-asset CIT posted net income of $157 million in the quarter, compared with a $23 million loss in the year-earlier period. Its earnings per share of 85 cents were 20 cents better than the mean of analysts’ estimates compiled by FactSet Research Systems.
The results included numerous one-time items tied to Chairwoman and CEO Ellen Alemany’s strategy to shrink the balance sheet and shift the business model following the
CIT’s total assets declined 20% from just three months earlier due to some of the changes. The items included: $100 million of debt-extinguishment costs tied to the reduction of $5.8 billion of unsecured debt, reducing earnings by 54 cents; a $100 million gain from the $10.4 billion sale of Commercial Air in April, which generated 54 cents of earnings; a $19 million benefit from the resolution of legacy tax items, which boosted earnings by 11 cents a share.
“We made significant progress in advancing our strategic plan in the second quarter as we position CIT to be a leading bank serving the middle market and small businesses nationwide,” Alemany said in a news release Tuesday.
Net interest revenue was little changed at $264.6 million. Total loans fell 5% to $37.1 billion.
Total deposits of $31 billion represented about 78% of CIT’s funding sources, an increase from 69% in the first quarter. Alemany is building up CIT’s deposits as a way to provide a lower cost of funding for business loans.
Noninterest income fell 7% to $335.8 million on lower rental income from operating lease equipment. Noninterest expenses increased 39% to $591.1 million on the debt-extinguishment costs and other items.
