CIT posts 2nd-qtr profit, reversing year-ago loss
Commercial lender CIT Group posts 2nd-qtr net income of $183.6 million, reverses year-ago loss
NEW YORK (AP) -- Commercial lender CIT Group Inc. on Tuesday posted a $183.6 million second-quarter profit, reversing a year-ago loss that stemmed from hefty debt-related charges. The results topped Wall Street projections, and shares rose modestly in morning trading.
CIT Group has worked to strengthen its balance sheet following its bankruptcy reorganization in late 2009. In the second quarter of 2012, CIT Group took a charge of $286 million to prepay high-cost debt. The moves, along with currently low interest rates, have reduced its debt costs.
The New York company, which lends mainly to small and mid-sized businesses, said second-quarter profit that amounted to 91 cents per share. That compared with a loss of $72.9 million, or 81 cents per share, in the same quarter the year before.
That was better than Wall Street expected. Analysts, on average, expected a profit of 88 cents per share, according to FactSet.
CIT shares gained 82 cents, nearly 2 percent, to $49.82 in morning trading. The stock has changed hands between $34.15 and $51.36 in the past 52 weeks.
The company said its total interest income, or earnings from loans and deposits, fell 14 percent to $351.6 million and noninterest income, which comes from fees and other items, fell 9 percent to $531.7 million.
Total interest expense dropped 56 percent to $281.4 million.
Total loans increased 8 percent to $21.68 billion.
Net charge-offs, or loans written off as uncollectible, were $29 million, up from $17 million last year. Non-accrual loans, or loans that are past due and in danger of default, dropped 39 percent, to $279 million, from $455 million a year ago.
The company set aside $15 million to cover soured loans, up 67 percent from last year.
CIT, which is led by John Thain, the former Merrill Lynch CEO, received notification in May that it was no longer under Federal Reserve supervision.
The agreement, which dated back to 2009, gave the Fed greater oversight and forced the company to strengthen its balance sheet. It also required government approval for any dividends, distributions, stock purchases or new debt.
At the time the deal was put in place, CIT had been facing a worsening liquidity crisis as the financial markets seized up. It filed for bankruptcy protection in late 2009. The company emerged in just six weeks after reshuffling its mounting debt.
