CIT reports $16 million net loss in third quarter of 2011

27 Oct 2011

1

CIT Group Inc, a leading provider of financing to small businesses and middle market companies, has reported a net loss of $16 million (or $0.08 per diluted share) for the quarter ended 30 September 2011, down from net income of $116 million ($0.58 per diluted share) a year ago.

CIT attributed this to reduced fresh start accounting (FSA) benefits and higher costs associated with the prepayments of first and second lien debt.

Net income for the nine months ended 30 September 2011 was $1 million, $0.01 per diluted share, down from $442 million, $2.20 per diluted share for 2010.

"Our franchises remain strong and continue to provide much needed financing to the small business and middle market sectors despite the continued uncertainties around the US and global economies," said John A Thain, chairman and chief executive  of CIT Group.

"Our franchises remain strong and continue to provide much needed financing to the small business and middle market sectors despite the continued uncertainties around the US and global economies, he said, adding, "We advanced our 2011 priorities by growing business volumes, accessing diverse funding markets, and further reducing high cost debt. In October, we successfully launched CIT Bank online and eliminated most of the restrictive covenants in our Series A second lien notes. We will continue to capitalise on market opportunities and make progress on our strategic objectives."

Third quarter operating results reflect increases in new business volume, continued asset sales and lower funding, credit and operating costs. Pre-tax income was $14 million against a pre-tax loss of $22 million in the prior quarter. Both periods include significant costs associated with debt redemptions ($169 million in the current quarter and $163 million in the second quarter), as well as sizable benefits from net FSA accretion ($95 million in the current quarter and $124 million in the second quarter). The third quarter net loss of $16 million ($0.08 per share) resulted from a $31 million provision for income taxes, an increase of $4 million from the second quarter. Pre-tax results for the quarter ended September 30, 2010 totaled $236 million, which included $262 million of net FSA accretion benefit and $10 million of debt redemption costs.

Total assets as of 30 September 2011 were $44.5 billion, down $3.5 billion from 30 June 2011 and down $9.0 billion from a year ago. Cash and short-term investments declined $2.7 billion sequentially to $7.3 billion reflecting actions taken on several liability management initiatives, including the previously mentioned debt repayments. Total loans decreased $0.5 billion during the quarter to $21.8 billion primarily due to asset sales and run-off of the consumer portfolio as funded new business volume exceeded portfolio collections in the commercial segments. Operating lease equipment increased slightly to $11.2 billion, reflecting purchases of aircraft and railcars.

Business History Videos

History of hovercraft Part 3...

Today I shall talk a bit more about the military plans for ...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of hovercraft Part 2...

In this episode of our history of hovercraft, we shall exam...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Hovercraft Part 1...

If you’ve been a James Bond movie fan, you may recall seein...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Trams in India | ...

The video I am presenting to you is based on a script writt...

By Aniket Gupta | Presenter: Sheetal Gaikwad

view more