|X| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | | | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |||
For the quarterly period ended March 31, 2018 |
Delaware (State or other jurisdiction of incorporation or organization) | 65-1051192 (IRS Employer Identification Number) | |||||
11 West 42nd Street New York, New York (Address of Registrant’s principal executive offices) | 10036 (Zip Code) | |||||
(212) 461-5200 (Registrant’s telephone number) |
CONTENTS |
Item 1. | ||||||||
Item 2. | ||||||||
and | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 2. | ||||||||
Item 4. | ||||||||
Item 6. | ||||||||
CIT GROUP INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (dollars in millions — except share data) | ||||||||
March 31, 2018 | December 31, 2017 | |||||||
Assets | ||||||||
Cash and due from banks, including restricted balances of $34.7 and $42.9 at March 31, 2018 and December 31, 2017(1), respectively (see Note 6 for amounts pledged) | $ | 200.9 | $ | 278.6 | ||||
Interest bearing deposits, including restricted balances of $82.3 and $81.8 at March 31, 2018 and December 31, 2017(1), respectively (see Note 6 for amounts pledged) | 3,895.4 | 1,440.1 | ||||||
Securities purchased under agreement to resell | 250.0 | 150.0 | ||||||
Investment securities, including securities carried at fair value with changes recorded in net income of $44.1 at March 31, 2018 and $0.4 at December 31, 2017 (see Note 6 for amounts pledged) | 5,910.5 | 6,469.9 | ||||||
Assets held for sale(1) | 2,298.8 | 2,263.1 | ||||||
Loans (see Note 6 for amounts pledged) | 29,453.6 | 29,113.9 | ||||||
Allowance for loan losses | (447.6 | ) | (431.1 | ) | ||||
Total loans, net of allowance for loan losses(1) | 29,006.0 | 28,682.8 | ||||||
Operating lease equipment, net (see Note 6 for amounts pledged)(1) | 6,774.9 | 6,738.9 | ||||||
Bank-owned life insurance | 795.1 | 788.6 | ||||||
Goodwill | 369.9 | 369.9 | ||||||
Other assets, including $118.7 and $68.7 at March 31, 2018 and December 31, 2017, respectively, at fair value | 1,577.9 | 1,595.5 | ||||||
Assets of discontinued operations(1) | 463.1 | 501.3 | ||||||
Total Assets | $ | 51,542.5 | $ | 49,278.7 | ||||
Liabilities | ||||||||
Deposits | $ | 30,593.9 | $ | 29,569.3 | ||||
Credit balances of factoring clients | 1,549.0 | 1,468.6 | ||||||
Other liabilities, including $215.4 and $198.1 at March 31, 2018 and December 31, 2017, respectively, at fair value | 1,338.9 | 1,437.1 | ||||||
Borrowings, including $1,875.0 and $1,626.3 contractually due within twelve months at March 31, 2018 and December 31, 2017, respectively | 10,437.3 | 8,974.4 | ||||||
Liabilities of discontinued operations(1) | 496.6 | 509.3 | ||||||
Total Liabilities | 44,415.7 | 41,958.7 | ||||||
Stockholders’ Equity | ||||||||
Preferred Stock: $0.01 par value, 100,000,000 authorized, 325,000 shares issued and outstanding | 325.0 | — | 325.0 | |||||
Common Stock: $0.01 par value, 600,000,000 authorized | ||||||||
Issued: 208,830,397 and 207,628,491 at March 31, 2018 and December 31, 2017, respectively | 2.1 | 2.1 | ||||||
Outstanding: 128,418,283 and 131,352,924 at March 31, 2018 and December 31, 2017, respectively | ||||||||
Paid-in capital | 8,811.8 | 8,798.1 | ||||||
Retained earnings | 1,982.7 | 1,906.5 | ||||||
Accumulated other comprehensive loss | (149.9 | ) | (86.5 | ) | ||||
Treasury stock: 80,412,114 and 76,275,567 shares at March 31, 2018 and December 31, 2017 at cost, respectively | (3,844.9 | ) | (3,625.2 | ) | ||||
Total Common Stockholders’ Equity | 6,801.8 | 6,995.0 | ||||||
Total Equity | 7,126.8 | 7,320.0 | ||||||
Total Liabilities and Equity | $ | 51,542.5 | $ | 49,278.7 |
March 31, 2017 | December 31, 2016 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Assets | ||||||||||
Cash and due from banks, including restricted balances of $126.8 and $176.1 at March 31, 2017 and December 31, 2016(1), respectively (see Note 6 for amounts pledged) | $ | 741.7 | $ | 822.1 | ||||||
Interest bearing deposits, including restricted balances of $100.3 and $102.8 at March 31, 2017 and December 31, 2016(1), respectively (see Note 6 for amounts pledged) | 5,415.2 | 5,608.5 | ||||||||
Investment securities, including securities carried at fair value with changes recorded in net income of $268.9 and $283.5 at March 31, 2017 and December 31, 2016, respectively (see Note 6 for amounts pledged) | 4,476.3 | 4,491.1 | ||||||||
Assets held for sale(1) | 562.6 | 636.0 | ||||||||
Loans (see Note 6 for amounts pledged) | 29,691.4 | 29,535.9 | ||||||||
Allowance for loan losses | (448.6 | ) | (432.6 | ) | ||||||
Total loans, net of allowance for loan losses(1) | 29,242.8 | 29,103.3 | ||||||||
Operating lease equipment, net (see Note 6 for amounts pledged)(1) | 7,516.2 | 7,486.1 | ||||||||
Indemnification assets | 313.1 | 341.4 | ||||||||
Unsecured counterparty receivable | 212.0 | 394.5 | ||||||||
Goodwill | 686.1 | 685.4 | ||||||||
Intangible assets | 134.3 | 140.7 | ||||||||
Other assets, including $75.8 and $111.6 at March 31, 2017 and December 31, 2016, respectively, at fair value | 1,075.9 | 1,240.4 | ||||||||
Assets of discontinued operations | 12,718.2 | 13,220.7 | ||||||||
Total Assets | $ | 63,094.4 | $ | 64,170.2 | ||||||
Liabilities | ||||||||||
Deposits | $ | 32,336.2 | $ | 32,304.3 | ||||||
Credit balances of factoring clients | 1,547.1 | 1,292.0 | ||||||||
Other liabilities, including $163.4 and $177.9 at March 31, 2017 and December 31, 2016, respectively, at fair value | 1,577.4 | 1,897.6 | ||||||||
Borrowings, including $3,693.7 and $2,321.7 contractually due within twelve months at March 31, 2017 and December 31, 2016, respectively | 14,736.3 | 14,935.5 | ||||||||
Liabilities of discontinued operations | 2,731.9 | 3,737.7 | ||||||||
Total Liabilities | 52,928.9 | 54,167.1 | ||||||||
Stockholders’ Equity | ||||||||||
Common stock: $0.01 par value, 600,000,000 authorized | ||||||||||
Issued: 207,287,457 and 206,182,213 at March 31, 2017 and December 31, 2016, respectively | 2.1 | 2.1 | ||||||||
Outstanding: 202,735,681 and 202,087,672 at March 31, 2017 and December 31, 2016, respectively | ||||||||||
Paid-in capital | 8,782.6 | 8,765.8 | ||||||||
Retained earnings | 1,701.1 | 1,553.0 | ||||||||
Accumulated other comprehensive loss | (123.7 | ) | (140.1 | ) | ||||||
Treasury stock: 4,551,776 and 4,094,541 shares at March 31, 2017 and December 31, 2016 at cost, respectively | (196.9 | ) | (178.1 | ) | ||||||
Total Common Stockholders’ Equity | 10,165.2 | 10,002.7 | ||||||||
Noncontrolling minority interests | 0.3 | 0.4 | ||||||||
Total Equity | 10,165.5 | 10,003.1 | ||||||||
Total Liabilities and Equity | $ | 63,094.4 | $ | 64,170.2 |
(1) | The following table presents information on assets and liabilities related to Variable Interest Entities (VIEs) that are consolidated by the Company. The difference between VIE total assets and total liabilities represents the Company’s interests in those entities, which were eliminated in consolidation. The assets of the consolidated VIEs will be used to settle the liabilities of those entities and, except for the Company’s interest in the VIEs, are not available to the creditors of CIT or any affiliates of CIT. |
Assets | ||||||||||||
Cash and interest bearing deposits, restricted | $ | 98.5 | $ | 99.9 | ||||||||
Total loans, net of allowance for loan losses | 223.8 | 300.5 | ||||||||||
Operating lease equipment, net | 770.6 | 775.8 | ||||||||||
Assets of discontinued operations | 406.0 | 2,321.7 | ||||||||||
Total Assets | $ | 1,498.9 | $ | 3,497.9 | ||||||||
Liabilities | ||||||||||||
Beneficial interests issued by consolidated VIEs (classified as long-term borrowings) | $ | 696.5 | $ | 770.0 | ||||||||
Liabilities of discontinued operations | 197.9 | 1,204.6 | ||||||||||
Total Liabilities | $ | 894.4 | $ | 1,974.6 |
Assets | |||||||
Cash and interest bearing deposits, restricted | $ | 80.5 | $ | 80.4 | |||
Total loans, net of allowance for loan losses | 2.7 | 119.1 | |||||
Operating lease equipment, net | 771.8 | 763.3 | |||||
Total Assets | $ | 855.0 | $ | 962.8 | |||
Liabilities | |||||||
Beneficial interests issued by consolidated VIEs (classified as long-term borrowings) | $ | 484.6 | $ | 566.6 | |||
Total Liabilities | $ | 484.6 | $ | 566.6 |
CIT GROUP INC. AND SUBSIDIARIES Quarters Ended March 31, 2018 2017 Interest income Interest and fees on loans $ 400.9 $ 412.1 Other interest and dividends 50.3 43.6 Interest income 451.2 455.7 Interest expense Interest on borrowings 83.4 69.1 Interest on deposits 97.1 94.0 Interest expense 180.5 163.1 Net interest revenue 270.7 292.6 Provision for credit losses 68.8 49.7 Net interest revenue, after credit provision 201.9 242.9 Non-interest income Rental income on operating leases 253.6 251.3 Other non-interest income 104.7 79.1 Total non-interest income 358.3 330.4 Total revenue, net of interest expense and credit provision 560.2 573.3 Non-interest expenses Depreciation on operating lease equipment 76.4 73.5 Maintenance and other operating lease expenses 57.4 53.8 Operating expenses 281.3 311.6 Loss on debt extinguishment and deposit redemption 0.1 — Total non-interest expenses 415.2 438.9 Income from continuing operations before benefit (provision) for income taxes 145.0 134.4 Provision for income taxes 41.3 56.2 Income from continuing operations 103.7 78.2 Discontinued Operations Income (loss) from discontinued operations, net of taxes (6.7 ) 89.0 Gain on sale of discontinued operations, net of taxes — 12.7 Total income (loss) from discontinued operations, net of taxes (6.7 ) 101.7 Net Income $ 97.0 $ 179.9 Basic income per common share Income from continuing operations $ 0.79 $ 0.39 Income (loss) from discontinued operations (0.05 ) 0.50 Basic income per share $ 0.74 $ 0.89 Diluted income per common share Income from continuing operations $ 0.79 $ 0.38 Income (loss) from discontinued operations (0.05 ) 0.50 Diluted income per share $ 0.74 $ 0.88 Average number of common shares (thousands) Basic 130,483 202,449 Diluted 131,588 203,348 Dividends declared per common share $ 0.16 $ 0.15
Quarters Ended March 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2017 | 2016 | ||||||||||
Interest income | |||||||||||
Interest and fees on loans | $ | 412.1 | $ | 451.9 | |||||||
Other interest and dividends | 43.6 | 31.0 | |||||||||
Interest income | 455.7 | 482.9 | |||||||||
Interest expense | |||||||||||
Interest on borrowings | (69.1 | ) | (95.5 | ) | |||||||
Interest on deposits | (94.0 | ) | (99.5 | ) | |||||||
Interest expense | (163.1 | ) | (195.0 | ) | |||||||
Net interest revenue | 292.6 | 287.9 | |||||||||
Provision for credit losses | (49.7 | ) | (89.5 | ) | |||||||
Net interest revenue, after credit provision | 242.9 | 198.4 | |||||||||
Non-interest income | |||||||||||
Rental income on operating leases | 251.3 | 264.1 | |||||||||
Other income | 79.1 | 84.8 | |||||||||
Total non-interest income | 330.4 | 348.9 | |||||||||
Total revenue, net of interest expense and credit provision | 573.3 | 547.3 | |||||||||
Non-interest expenses | |||||||||||
Depreciation on operating lease equipment | (73.5 | ) | (61.3 | ) | |||||||
Maintenance and other operating lease expenses | (53.8 | ) | (48.9 | ) | |||||||
Operating expenses | (311.6 | ) | (330.1 | ) | |||||||
Loss on debt extinguishment and deposit redemption | – | (1.6 | ) | ||||||||
Total non-interest expenses | (438.9 | ) | (441.9 | ) | |||||||
Income from continuing operations before provision for income taxes | 134.4 | 105.4 | |||||||||
Provision for income taxes | (56.2 | ) | (44.4 | ) | |||||||
Income from continuing operations | 78.2 | 61.0 | |||||||||
Discontinued Operations | |||||||||||
Income from discontinued operations, net of taxes | 89.0 | �� | 85.0 | ||||||||
Gain on sale of discontinued operation, net of taxes | 12.7 | – | |||||||||
Total income from discontinued operations, net of taxes | 101.7 | 85.0 | |||||||||
Net Income | $ | 179.9 | $ | 146.0 | |||||||
Basic income per common share | |||||||||||
Income from continuing operations | $ | 0.39 | $ | 0.30 | |||||||
Income from discontinued operations | 0.50 | 0.42 | |||||||||
Basic income per share | $ | 0.89 | $ | 0.72 | |||||||
Diluted income per common share | |||||||||||
Income from continuing operations | $ | 0.38 | $ | 0.30 | |||||||
Income from discontinued operations | 0.50 | 0.42 | |||||||||
Diluted income per share | $ | 0.88 | $ | 0.72 | |||||||
Average number of common shares (thousands) | |||||||||||
Basic | 202,449 | 201,394 | |||||||||
Diluted | 203,348 | 202,136 | |||||||||
Dividends declared per common share | $ | 0.15 | $ | 0.15 |
CIT GROUP INC. AND SUBSIDIARIES
CIT GROUP INC. AND SUBSIDIARIES |
Quarters Ended March 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2017 | 2016 | ||||||||||
Net Income | $ | 179.9 | $ | 146.0 | |||||||
Other comprehensive income, net of tax: | |||||||||||
Foreign currency translation adjustments | 12.8 | 21.2 | |||||||||
Net unrealized gains on available for sale securities | 2.7 | 2.6 | |||||||||
Changes in benefit plans net gain (loss) and prior service (cost)/credit | 0.9 | 0.9 | |||||||||
Other comprehensive income, net of tax | 16.4 | 24.7 | |||||||||
Comprehensive income | $ | 196.3 | $ | 170.7 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (dollars in millions) | ||||||||
Quarters Ended March 31, | ||||||||
2018 | 2017 | |||||||
Net Income | $ | 97.0 | $ | 179.9 | ||||
Other comprehensive income (loss), net of tax: | ||||||||
Foreign currency translation adjustments | (2.4 | ) | 12.8 | |||||
Net unrealized gains (losses) on available for sale securities | (63.9 | ) | 2.7 | |||||
Changes in benefit plans net gain (loss) and prior service (cost)/credit | 3.4 | 0.9 | ||||||
Other comprehensive income (loss), net of tax | (62.9 | ) | 16.4 | |||||
Comprehensive income | $ | 34.1 | $ | 196.3 |
CIT GROUP INC. AND SUBSIDIARIES
CIT GROUP INC. AND SUBSIDIARIES |
Common Stock | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Noncontrolling Minority Interests | Total Equity | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2016 as reported | $ | 2.1 | $ | 8,765.8 | $ | 1,553.0 | $ | (140.1 | ) | $ | (178.1 | ) | $ | 0.4 | $ | 10,003.1 | ||||||||||||||
Adoption of Accounting Standard Update 2016-09 | – | 1.0 | (1.0 | ) | – | – | – | – | ||||||||||||||||||||||
Balance December 31, 2016 | 2.1 | 8,766.8 | 1,552.0 | (140.1 | ) | (178.1 | ) | 0.4 | 10,003.1 | |||||||||||||||||||||
Net income | – | – | 179.9 | – | – | – | 179.9 | |||||||||||||||||||||||
Other comprehensive income, net of tax | – | – | – | 16.4 | – | – | 16.4 | |||||||||||||||||||||||
Dividends paid | – | – | (30.8 | ) | – | – | – | (30.8 | ) | |||||||||||||||||||||
Amortization of restricted stock, stock option and performance shares expenses | – | 15.0 | – | – | (18.8 | ) | – | (3.8 | ) | |||||||||||||||||||||
Employee stock purchase plan | – | 0.8 | – | – | – | – | 0.8 | |||||||||||||||||||||||
Other | – | – | – | – | – | (0.1 | ) | (0.1 | ) | |||||||||||||||||||||
March 31, 2017 | $ | 2.1 | $ | 8,782.6 | $ | 1,701.1 | $ | (123.7 | ) | $ | (196.9 | ) | $ | 0.3 | $ | 10,165.5 | ||||||||||||||
December 31, 2015 | $ | 2.0 | $ | 8,718.1 | $ | 2,524.0 | $ | (142.1 | ) | $ | (157.3 | ) | $ | 0.5 | $ | 10,945.2 | ||||||||||||||
Net income | – | – | 146.0 | – | – | – | 146.0 | |||||||||||||||||||||||
Other comprehensive income, net of tax | – | – | – | 24.7 | – | – | 24.7 | |||||||||||||||||||||||
Dividends paid | – | – | (30.6 | ) | – | – | – | (30.6 | ) | |||||||||||||||||||||
Amortization of restricted stock, stock option and performance shares expenses | – | 20.8 | – | – | (14.7 | ) | – | 6.1 | ||||||||||||||||||||||
Issuance of common stock — acquisition | 0.1 | – | – | – | – | – | 0.1 | |||||||||||||||||||||||
Employee stock purchase plan | – | 0.5 | – | – | – | – | 0.5 | |||||||||||||||||||||||
Other | 0.1 | 0.1 | ||||||||||||||||||||||||||||
March 31, 2016 | $ | 2.1 | $ | 8,739.4 | $ | 2,639.5 | $ | (117.4 | ) | $ | (172.0 | ) | $ | 0.5 | $ | 11,092.1 |
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) (dollars in millions) | |||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Noncontrolling Minority Interests | Total Equity | ||||||||||||||||||||||||
December 31, 2017 | $ | 325.0 | $ | 2.1 | $ | 8,798.1 | $ | 1,906.5 | $ | (86.5 | ) | $ | (3,625.2 | ) | $ | — | $ | 7,320.0 | |||||||||||||
Adoption of Accounting Standard Updates 2016-01, 2016-16, and 2018-02 | — | — | — | 0.7 | (0.5 | ) | — | — | 0.2 | ||||||||||||||||||||||
Net income | — | — | — | 97.0 | — | — | — | 97.0 | |||||||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | (62.9 | ) | — | — | (62.9 | ) | |||||||||||||||||||||
Dividends paid | — | — | — | (21.5 | ) | — | — | — | (21.5 | ) | |||||||||||||||||||||
Share repurchases | — | — | — | — | — | (194.9 | ) | — | (194.9 | ) | |||||||||||||||||||||
Amortization of restricted stock, stock option and performance shares expenses | — | — | 13.0 | — | — | (24.8 | ) | — | (11.8 | ) | |||||||||||||||||||||
Employee stock purchase plan | — | — | 0.7 | — | — | — | — | 0.7 | |||||||||||||||||||||||
March 31, 2018 | $ | 325.0 | $ | 2.1 | $ | 8,811.8 | $ | 1,982.7 | $ | (149.9 | ) | $ | (3,844.9 | ) | $ | — | $ | 7,126.8 | |||||||||||||
December 31, 2016 | $ | — | $ | 2.1 | $ | 8,765.8 | $ | 1,553.0 | $ | (140.1 | ) | $ | (178.1 | ) | $ | 0.4 | $ | 10,003.1 | |||||||||||||
Adoption of Accounting Standard Update 2016-09 | — | — | 1.0 | (1.0 | ) | — | — | — | — | ||||||||||||||||||||||
Net income | — | — | — | 179.9 | — | — | — | 179.9 | |||||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | 16.4 | — | — | 16.4 | |||||||||||||||||||||||
Dividends paid | — | — | — | (30.8 | ) | — | — | — | (30.8 | ) | |||||||||||||||||||||
Amortization of restricted stock, stock option and performance shares expenses | — | — | 15.0 | — | — | (18.8 | ) | — | (3.8 | ) | |||||||||||||||||||||
Employee stock purchase plan | — | — | 0.8 | — | — | — | — | 0.8 | |||||||||||||||||||||||
Other | — | — | — | — | — | — | (0.1 | ) | (0.1 | ) | |||||||||||||||||||||
March 31, 2017 | $ | — | $ | 2.1 | $ | 8,782.6 | $ | 1,701.1 | $ | (123.7 | ) | $ | (196.9 | ) | $ | 0.3 | $ | 10,165.5 |
CIT GROUP INC. AND SUBSIDIARIES
CIT GROUP INC. AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (dollars in millions) | |||||||
Quarters Ended March 31, | |||||||
2018 | 2017 | ||||||
Cash Flows From Operations | |||||||
Net income | $ | 97.0 | $ | 179.9 | |||
Adjustments to reconcile net income to net cash flows from operations: | |||||||
Provision for credit losses | 68.8 | 49.7 | |||||
Depreciation on operating lease equipment | 76.4 | 73.5 | |||||
Amortization of stock compensation expenses | 13.0 | 15.0 | |||||
Net gain on asset sales and impairments on assets held for sale | (20.9 | ) | (35.0 | ) | |||
Loss on debt extinguishment and other deposit redemption | 0.1 | 39.0 | |||||
Provision for deferred income taxes | 25.4 | 113.5 | |||||
Decrease in finance receivables held for sale | 7.6 | 53.8 | |||||
(Increase) decrease in other assets | (33.4 | ) | 21.2 | ||||
Decrease in other liabilities | (112.7 | ) | (220.4 | ) | |||
Other operating activities | 5.8 | 15.5 | |||||
Net cash flows provided by operations | 127.1 | 305.7 | |||||
Cash Flows From Investing Activities | |||||||
Changes in loans, net | (412.7 | ) | 28.0 | ||||
Purchases of investment securities | (662.4 | ) | (1,806.2 | ) | |||
Proceeds from sales and maturities of investment securities | 1,067.0 | 1,827.9 | |||||
Proceeds from asset and receivable sales | 175.6 | 393.2 | |||||
Purchases of assets to be leased and other equipment | (148.3 | ) | (399.5 | ) | |||
Proceeds from sale of OREO, net of repurchases | 19.9 | 28.9 | |||||
Other investing activities | 16.1 | 25.2 | |||||
Net cash flows provided by investing activities | 55.2 | 97.5 | |||||
Cash Flows From Financing Activities | |||||||
Proceeds from the issuance of term debt and FHLB advances | 3,061.6 | 8.5 | |||||
Repayments of term debt, FHLB advances, and net settlements | (1,636.6 | ) | (1,083.3 | ) | |||
Net increase in deposits | 1,023.3 | 35.0 | |||||
Repurchase of common stock | (194.9 | ) | — | ||||
Dividends paid | (21.5 | ) | (30.8 | ) | |||
Other financing activities | (35.0 | ) | 6.5 | ||||
Net cash flows provided by (used in) financing activities | 2,196.9 | (1,064.1 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 0.5 | 3.8 | |||||
Increase (decrease) in cash, cash equivalents and restricted cash | 2,379.7 | (657.1 | ) | ||||
Cash, cash equivalents, and restricted cash beginning of period | 1,726.4 | 7,195.4 | |||||
Cash, cash equivalents, and restricted cash end of period | $ | 4,106.1 | $ | 6,538.3 | |||
Supplementary Cash Flow Disclosures | |||||||
Interest paid | $ | (200.8 | ) | $ | (315.3 | ) | |
Federal, foreign, state and local income taxes (paid) refunded, net | $ | (3.2 | ) | $ | 0.2 | ||
Supplementary Non Cash Flow Disclosure | |||||||
Transfer of assets from held for investment to held for sale | $ | 150.2 | $ | 227.2 | |||
Transfer of assets from held for sale to held for investment | $ | 20.8 | $ | 26.7 | |||
Deposits on flight equipment purchases applied to acquisition of flight equipment purchases, and origination of finance leases, capitalized interest, and buyer furnished equipment | $ | — | $ | 91.2 | |||
Transfers of assets to OREO | $ | 9.6 | $ | 38.9 | |||
Capital lease unexercised bargain purchase options | $ | — | $ | 17.5 | |||
Commitments extended during the period on affordable housing investment credits | $ | 15.0 | $ | — |
Three Months Ended March 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2017 | 2016 | ||||||||||
Cash Flows From Operations | |||||||||||
Net income | $ | 179.9 | $ | 146.0 | |||||||
Adjustments to reconcile net income to net cash flows from operations: | |||||||||||
Provision for credit losses | 49.7 | 99.3 | |||||||||
Net depreciation, amortization and (accretion) | 98.8 | 204.0 | |||||||||
Net gains (losses) on asset sales and impairments on assets held for sale and other | 9.5 | (4.9 | ) | ||||||||
Provision for deferred income taxes | 113.5 | 66.7 | |||||||||
Decrease in finance receivables held for sale | 53.8 | 233.4 | |||||||||
Net (payment) reimbursement of expense from FDIC | (2.7 | ) | 0.9 | ||||||||
Decrease (increase) in other assets | 21.2 | (76.8 | ) | ||||||||
Decrease in other liabilities | (234.2 | ) | (258.5 | ) | |||||||
Net cash flows provided by operations | 289.5 | 410.1 | |||||||||
Cash Flows From Investing Activities | |||||||||||
Changes in loans, net | 283.6 | (137.7 | ) | ||||||||
Purchases of investment securities | (1,806.2 | ) | (494.9 | ) | |||||||
Proceeds from maturities of investment securities | 1,823.0 | 541.5 | |||||||||
Proceeds from asset and receivable sales | 393.2 | 422.1 | |||||||||
Purchases of assets to be leased and other equipment | (399.5 | ) | (362.0 | ) | |||||||
Net decrease in short-term factoring receivables | (245.5 | ) | (209.9 | ) | |||||||
Proceeds from redemption of restricted stock | 8.6 | 2.2 | |||||||||
Payments to the FDIC under loss share agreements | – | (1.1 | ) | ||||||||
Proceeds from the FDIC under loss share agreements and participation agreements | 25.2 | 27.1 | |||||||||
Proceeds from sale of OREO, net of repurchases | 28.9 | 36.6 | |||||||||
Net change in restricted cash | 509.7 | 7.6 | |||||||||
Net cash flows provided by (used in) investing activities | 621.0 | (168.5 | ) | ||||||||
Cash Flows From Financing Activities | |||||||||||
Proceeds from the issuance of term debt | 8.5 | 4.1 | |||||||||
Repayments of term debt and net settlements | (1,080.7 | ) | (502.3 | ) | |||||||
Proceeds from FHLB advances | – | 551.0 | |||||||||
Repayments of FHLB debt | (0.2 | ) | (552.3 | ) | |||||||
Net increase in deposits | 35.0 | 114.2 | |||||||||
Collection of security deposits and maintenance funds | 63.1 | 70.1 | |||||||||
Use of security deposits and maintenance funds | (31.5 | ) | (30.8 | ) | |||||||
Dividends paid | (30.8 | ) | (30.6 | ) | |||||||
Taxes paid through withholding of common stock under employee stock plans | (16.5 | ) | (10.5 | ) | |||||||
Payments on affordable housing investment credits | (8.6 | ) | (4.3 | ) | |||||||
Net cash flows used in financing activities | (1,061.7 | ) | (391.4 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | 3.8 | (2.3 | ) | ||||||||
Decrease in unrestricted cash and cash equivalents | (147.4 | ) | (152.1 | ) | |||||||
Unrestricted cash and cash equivalents, beginning of period | 6,375.2 | 7,470.6 | |||||||||
Unrestricted cash and cash equivalents, end of period | $ | 6,227.8 | $ | 7,318.5 | |||||||
Supplementary Cash Flow Disclosure | |||||||||||
Interest paid | $ | (315.3 | ) | $ | (338.0 | ) | |||||
Federal, foreign, state and local income taxes refunded (paid), net | $ | 0.2 | $ | (0.2 | ) | ||||||
Supplementary Non Cash Flow Disclosure | |||||||||||
Transfer of assets from held for investment to held for sale | $ | 227.2 | $ | 833.4 | |||||||
Transfer of assets from held for sale to held for investment | $ | 26.7 | $ | 61.1 | |||||||
Deposits on flight equipment purchases applied to acquisition of flight equipment purchases, and origination of finance leases, capitalized interest, and buyer furnished equipment | $ | 91.2 | $ | 29.4 | |||||||
Transfers of assets from held for investment to OREO | $ | 38.9 | $ | 19.9 | |||||||
Capital Lease unexercised bargain purchase options | $ | 17.5 | – |
Quarters Ended March 31, | |||||||
2018 | 2017 | ||||||
Cash and due from banks, including restricted balances of $34.7 and $126.8 at March 31, 2018 and March 31, 2017, respectively | $ | 200.9 | $ | 741.7 | |||
Interest bearing deposits, including restricted balances of $82.3 and $102.8 at March 31, 2018 and March 31, 2017, respectively | 3,895.4 | 5,415.2 | |||||
Cash included in assets of discontinued operations | 9.8 | 381.4 | |||||
Total cash, cash equivalents, and restricted cash shown in the Statements of Cash Flows | $ | 4,106.1 | $ | 6,538.3 |
GROUP INC. AND SUBSIDIARIESGroup Inc. and Subsidiaries – NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNotes to Condensed Consolidated Financial Statements (Unaudited)
Revenue Recognition On January 1, 2018, CIT adopted ASU 2014-09, |
Standard | Summary of Guidance | Effect on CIT's Financial Statements |
ASU 2017-08, Receivables -Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities Issued March 2017 | • ASU 2017-08 shortens the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date.• The new guidance applies to all entities that hold investments in callable debt securities for which the amortized cost basis exceeds the amount repayable by the issuer at the earliest call date (i.e., at a premium).• This guidance must be adopted on a modified retrospective basis through a cumulative-effect adjustment to retained earnings. | • Effective for CIT as of January 1, 2019.• CIT is currently evaluating the impact of this standard on its consolidated financial statements and disclosures and does not intend to early adopt this standard. |
ASU 2016-02, Leases (Topic 842) Issued February 2016 | • Lessees will need to recognize all leases longer than twelve months on the consolidated balance sheets as lease liabilities with corresponding right-of-use assets. For Income Statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit thresholds.• Lessor accounting remains similar to the current model, but updated to align with certain changes to the lessee model (e.g., certain definitions, such as initial direct costs, have been updated) and the new revenue recognition standard. Lease classifications by lessors are similar, operating, direct financing, or sales-type.• The ASU requires both quantitative and qualitative disclosures regarding key information about leasing arrangements. The new standard must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. Early adoption is permitted. | • Effective for CIT as of January 1, 2019.• CIT will need to determine the impact where it is both a lessee and a lessor:• Lessor accounting: CIT is analyzing the impact of changes to the definition of ‘initial direct costs’ under the new guidance. The new standard has a narrower definition of initial direct costs, which will result in CIT recognizing increased upfront expenses offset by higher yield over the lease term. CIT is currently evaluating the bifurcation of certain non-lease components from lease revenue streams. If goods or services are determined to be a non-lease component and accounted for under ASC 606 or other applicable GAAP guidance, the income recognition may differ from current accounting.• Lessee accounting: CIT is continuing to evaluate the impact of the amended guidance on its Condensed consolidated financial statements. CIT expects to recognize right-of-use assets and lease liabilities for substantially all of its operating lease commitments based on the present value of unpaid lease payments as of the date of adoption.• CIT management has assembled a project committee to assess the impact of this guidance. Initial scoping and assessment is complete and CIT is continuing to evaluate the impact on its consolidated financial statements and disclosures. |
ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Issued June 2016 | • Introduces a forward-looking “expected loss” model (the “Current Expected Credit Losses” (“CECL”) model) to estimate credit losses to cover the full remaining expected life of the portfolio upon adoption, rather than the incurred loss model under current U.S. GAAP, on certain types of financial instruments.• It eliminates existing guidance for PCI loans, and requires recognition of an allowance for expected credit losses on financial assets purchased with more than insignificant credit deterioration since origination.• It amends existing impairment guidance for AFS securities to incorporate an allowance, which will allow for reversals of impairment losses in the event that the credit of an issuer improves.• In addition, it expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the ALLL.• Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted (modified-retrospective approach). | • Effective for CIT as of January 1, 2020.• CIT management has established a project team and an oversight committee to assess the impact of this guidance and implement this standard. Initial gap assessment is complete and CIT is continuing to evaluate the impact on its consolidated financial statements and disclosures.• While CIT is currently in the process of evaluating the impact of the amended guidance on its Condensed consolidated financial statements, it currently expects the ALLL to increase upon adoption given that the allowance will be required to cover the full remaining expected life of the portfolio upon adoption, rather than the incurred loss model under current U.S. GAAP. The extent of this increase is still being evaluated and will depend on economic conditions and the composition of CIT’s loan and lease portfolios at adoption date. |
March 31, 2017 | December 31, 2016 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Total cash and deposits, of which $76.0 and $535.5 at March 31, 2017 and December 31, 2016, respectively, is restricted | $ | 374.0 | $ | 759.0 | ||||||
Net Finance Receivables | 847.1 | 1,047.7 | ||||||||
Operating lease equipment, net | 9,776.2 | 9,677.6 | ||||||||
Goodwill | 126.8 | 126.8 | ||||||||
Other assets(1) | 1,172.7 | 1,161.5 | ||||||||
Assets of discontinued operations | $ | 12,296.8 | $ | 12,772.6 | ||||||
Secured borrowings | $ | 197.9 | $ | 1,204.6 | ||||||
Other liabilities(2) | 1,611.9 | 1,597.3 | ||||||||
Liabilities of discontinued operations | $ | 1,809.8 | $ | 2,801.9 |
|
Quarters Ended March 31, | Quarters Ended March 31, | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2017 | 2016 | 2018 | 2017 | |||||||||||||||
Interest income | $ | 20.2 | $ | 16.0 | $ | 2.1 | $ | 20.2 | ||||||||||
Interest expense | (95.9 | ) | (91.4 | ) | 1.0 | 95.9 | ||||||||||||
Provision for credit losses | – | (9.9 | ) | |||||||||||||||
Rental income on operating leases | 306.7 | 311.3 | 0.5 | 306.7 | ||||||||||||||
Other Income | 13.4 | 16.0 | ||||||||||||||||
Depreciation on operating lease equipment(1) | – | (113.9 | ) | |||||||||||||||
Other income (losses) | (1.0 | ) | 13.4 | |||||||||||||||
Maintenance and other operating lease expenses | (4.2 | ) | (7.3 | ) | — | 4.2 | ||||||||||||
Operating expenses | (24.9 | ) | (23.2 | ) | 0.3 | 24.9 | ||||||||||||
Loss on debt extinguishment | (39.0 | ) | – | — | 39.0 | |||||||||||||
Income from discontinued operation before provision for income taxes | 176.3 | 97.6 | ||||||||||||||||
Income from discontinued operations before provision for income taxes | 0.3 | 176.3 | ||||||||||||||||
Provision for income taxes | (78.1 | ) | (7.8 | ) | 0.1 | 78.1 | ||||||||||||
Gain on sale of discontinued operations, net of taxes | 12.7 | – | — | 12.7 | ||||||||||||||
Income from discontinued operations, net of taxes | $ | 110.9 | $ | 89.8 | $ | 0.2 | $ | 110.9 |
(1) |
The Company repaid approximately $1 billion of secured borrowings in the first quarter of 2017 within discontinued operations and recorded a loss of $39 million in relation to the extinguishment of those borrowings. |
Quarters Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2017 | March 31, 2016 | ||||||||||
Net cash flows used for operations | $ | 128.1 | 253.2 | ||||||||
Net cash flows provided by investing activities | 558.2 | (67.1 | ) |
Quarters Ended March 31, | |||||||
2018 | 2017 | ||||||
Net cash flows provided by operations | $ | 13.6 | $ | 128.1 | |||
Net cash flows provided by investing activities | 20.1 | 98.7 |
March 31, 2017 | December 31, 2016 | March 31, 2018 | December 31, 2017 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total cash and deposits, all of which is restricted | $ | 7.4 | $ | 5.8 | $ | 9.8 | $ | 7.7 | |||||||||
Net Finance Receivables(1) | 352.8 | 374.0 | |||||||||||||||
Net Loans(1) | 253.7 | 272.8 | |||||||||||||||
Other assets(2) | 61.2 | 68.3 | 35.1 | 36.6 | |||||||||||||
Assets of discontinued operations | $ | 421.4 | $ | 448.1 | |||||||||||||
Assets of discontinued operation | $ | 298.6 | $ | 317.1 | |||||||||||||
Secured borrowings(1) | $ | 345.4 | $ | 366.4 | $ | 247.8 | $ | 268.2 | |||||||||
Other liabilities(3) | 576.7 | 569.4 | 228.7 | 232.3 | |||||||||||||
Liabilities of discontinued operations | $ | 922.1 | $ | 935.8 | |||||||||||||
Liabilities of discontinued operation | $ | 476.5 | $ | 500.5 |
(1) | Net |
(2) | Amount includes servicing advances, servicer receivables and property and equipment, net of accumulated depreciation. The loans serviced for others total $13.8 billion and $14.1 billion for reverse mortgage loans as of March 31, 2018 and December 31, 2017, respectively. |
(3) | Other liabilities include $135.3 million and $137.8 million of contingent liabilities, $79.5 million of reverse mortgage servicing liabilities and $13.9 million and $15.0 million of other accrued |
GROUP INC. AND SUBSIDIARIESGroup Inc. and Subsidiaries – NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNotes to Condensed Consolidated Financial Statements (Unaudited)
Quarters Ended March 31, | Quarters Ended March 31, | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2017 | 2016 | 2018 | 2017 | |||||||||||||||
Interest income(1) | $ | 2.8 | $ | 3.0 | $ | 2.1 | $ | 2.8 | ||||||||||
Interest expense(1) | (2.5 | ) | (3.0 | ) | 2.1 | 2.5 | ||||||||||||
Other income | 7.3 | 8.8 | 6.7 | 7.3 | ||||||||||||||
Operating expenses(2) | (22.7 | ) | (16.2 | ) | 16.1 | 22.7 | ||||||||||||
Loss from discontinued operation before benefit for income taxes | (15.1 | ) | (7.4 | ) | ||||||||||||||
Loss from discontinued operations before benefit for income taxes | (9.4 | ) | (15.1 | ) | ||||||||||||||
Benefit for income taxes(3) | 5.9 | 2.6 | (2.5 | ) | (5.9 | ) | ||||||||||||
Loss from discontinued operation, net of taxes | $ | (9.2 | ) | $ | (4.8 | ) | $ | (6.9 | ) | $ | (9.2 | ) |
(1) | Includes amortization for the premium associated with the HECM loans and related secured borrowings. |
(2) | For the quarter ended March 31, 2018 and March 31, 2017, operating expense is comprised of approximately $4 million and $5 million in salaries and benefits, $1 million and $6 million in professional and legal services, and $11 million and $13 million for other expenses such as data processing, premises and equipment, and miscellaneous |
(3) | For the quarters ended March 31, 2018 and 2017, |
Quarters Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2017 | March 31, 2016 | ||||||||||
Net cash flows used for operations | $ | (10.9 | ) | $ | (10.2 | ) | |||||
Net cash flows provided by investing activities | 23.4 | 19.8 |
Quarters Ended March 31, | |||||||
2018 | 2017 | ||||||
Net cash flows used for operation | $ | (3.3 | ) | $ | (8.4 | ) | |
Net cash flows provided by investing activities | 22.1 | 25.0 |
March 31, 2017 | December 31, 2016 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Total cash and deposits, of which $83.4 and $541.3 at March 31, 2017 and December 31, 2016, respectively, is restricted | $ | 381.4 | $ | 764.8 | ||||||
Net Finance Receivables | 1,199.9 | 1,421.7 | ||||||||
Operating lease equipment, net | 9,776.2 | 9,677.6 | ||||||||
Goodwill | 126.8 | 126.8 | ||||||||
Other assets | 1,233.9 | 1,229.8 | ||||||||
Assets of discontinued operations | $ | 12,718.2 | $ | 13,220.7 | ||||||
Secured borrowings | $ | 543.2 | $ | 1,571.0 | ||||||
Other liabilities | 2,188.7 | 2,166.7 | ||||||||
Liabilities of discontinued operations | $ | 2,731.9 | $ | 3,737.7 |
March 31, 2018 | December 31, 2017 | ||||||
Total cash and deposits | $ | 9.8 | $ | 7.7 | |||
Net Loans | 406.7 | 438.6 | |||||
Operating lease equipment, net | 11.4 | 18.4 | |||||
Other assets | 35.2 | 36.6 | |||||
Assets of discontinued operations | $ | 463.1 | $ | 501.3 | |||
Secured borrowings | $ | 247.8 | $ | 268.2 | |||
Other liabilities | 248.8 | 241.1 | |||||
Liabilities of discontinued operations | $ | 496.6 | $ | 509.3 |
Quarters Ended March 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2017 | 2016 | ||||||||||
Interest income | $ | 22.9 | $ | 19.0 | |||||||
Interest expense | (98.4 | ) | (94.4 | ) | |||||||
Provision for credit losses | – | (9.8 | ) | ||||||||
Rental income on operating leases | 306.7 | 311.3 | |||||||||
Other Income | 20.7 | 24.8 | |||||||||
Depreciation on operating lease equipment | – | (113.9 | ) | ||||||||
Maintenance and other operating lease expenses | (4.2 | ) | (7.3 | ) | |||||||
Operating expenses | (47.6 | ) | (39.5 | ) | |||||||
Loss on debt extinguishment | (39.0 | ) | – | ||||||||
Income from discontinued operation before provision for income taxes | 161.1 | 90.2 | |||||||||
Provision for income taxes | (72.1 | ) | (5.2 | ) | |||||||
Gain on sale of discontinued operations, net of taxes | 12.7 | – | |||||||||
Income from discontinued operations, net of taxes | $ | 101.7 | $ | 85.0 |
Quarters Ended March 31, | |||||||
2018 | 2017 | ||||||
Interest income | $ | 4.2 | $ | 22.9 | |||
Interest expense | 3.1 | 98.4 | |||||
Rental income on operating leases | 0.5 | 306.7 | |||||
Other income (losses) | 5.7 | 20.7 | |||||
Maintenance and other operating lease expenses | — | 4.2 | |||||
Operating expenses | 16.4 | 47.6 | |||||
Loss on debt extinguishment | — | 39.0 | |||||
Income (loss) from discontinued operations before benefit (provision) for income taxes | (9.1 | ) | 161.1 | ||||
(Benefit) provision for income taxes | (2.4 | ) | 72.1 | ||||
Gain on sale of discontinued operations, net of taxes | — | 12.7 | |||||
Income (loss) from discontinued operations, net of taxes | $ | (6.7 | ) | $ | 101.7 |
Quarters Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2017 | March 31, 2016 | ||||||||||
Net cash flows used for operations | $ | 117.2 | $ | 243.0 | |||||||
Net cash flows provided by investing activities | 581.6 | (47.3 | ) |
Quarters Ended March 31, | |||||||
2018 | 2017 | ||||||
Net cash flows provided by operations | $ | 10.3 | $ | 119.7 | |||
Net cash flows provided by investing activities | 42.2 | 123.7 |
Loans by Product (dollars in millions) | Loans by Product (dollars in millions) | ||||||||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2018 | December 31, 2017 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Commercial loans | $ | 20,429.6 | $ | 20,117.8 | $ | 21,163.9 | $ | 20,892.1 | |||||||||
Direct financing leases and leveraged leases | 2,817.5 | 2,852.9 | 2,625.2 | 2,685.8 | |||||||||||||
Total commercial | 23,247.1 | 22,970.7 | 23,789.1 | 23,577.9 | |||||||||||||
Consumer loans | 6,444.3 | 6,565.2 | 5,664.5 | 5,536.0 | |||||||||||||
Total finance receivables | 29,691.4 | 29,535.9 | |||||||||||||||
Finance receivables held for sale(1) | 562.0 | 635.8 | |||||||||||||||
Finance receivables and held for sale receivables(1) | $ | 30,253.4 | $ | 30,171.7 | |||||||||||||
Total loans | 29,453.6 | 29,113.9 | |||||||||||||||
Loans held for sale(1) | 1,085.9 | 1,095.7 | |||||||||||||||
Loans and held for sale loans(1) | $ | 30,539.5 | $ | 30,209.6 |
(1) |
Loans (dollars in millions) | Loans (dollars in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2018 | December 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Domestic | Foreign | Total | Domestic | Foreign | Total | Domestic | Foreign | Total | Domestic | Foreign | Total | |||||||||||||||||||||||||||||||||||||||
Commercial Banking | $ | 20,897.0 | $ | 1,981.6 | $ | 22,878.6 | $ | 20,440.7 | $ | 2,121.6 | $ | 22,562.3 | $ | 21,693.8 | $ | 1,652.1 | $ | 23,345.9 | $ | 21,368.7 | $ | 1,790.6 | $ | 23,159.3 | ||||||||||||||||||||||||||
Consumer Banking(1) | 6,812.8 | – | 6,812.8 | 6,973.6 | – | 6,973.6 | 6,107.7 | — | 6,107.7 | 5,954.6 | — | 5,954.6 | ||||||||||||||||||||||||||||||||||||||
Total | $ | 27,709.8 | $ | 1,981.6 | $ | 29,691.4 | $ | 27,414.3 | $ | 2,121.6 | $ | 29,535.9 | $ | 27,801.5 | $ | 1,652.1 | $ | 29,453.6 | $ | 27,323.3 | $ | 1,790.6 | $ | 29,113.9 |
(1) | The Consumer Banking segment includes certain commercial loans, primarily consisting of a portfolio of Small Business Administration |
Components of Net Investment in Loans (dollars in millions) | Components of Net Investment in Loans (dollars in millions) | ||||||||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2018 | December 31, 2017 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Unearned income | $ | (724.4 | ) | $ | (727.1 | ) | $ | (726.8 | ) | $ | (727.8 | ) | |||||
Unamortized premiums / (discounts) | (29.4 | ) | (31.0 | ) | 9.4 | 3.7 | |||||||||||
Accretable yield on Purchased Credit-Impaired (“PCI”) loans | (1,233.7 | ) | (1,261.4 | ) | (1,016.3 | ) | (1,063.7 | ) | |||||||||
Net unamortized deferred costs and (fees)(1) | 57.5 | 55.8 | 69.6 | 68.7 |
(1) | Balance relates to the Commercial Banking segment. |
GROUP INC. AND SUBSIDIARIESGroup Inc. and Subsidiaries – NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNotes to Condensed Consolidated Financial Statements (Unaudited)
Grade: | Pass | Special Mention | Classified- accruing | Classified- non-accrual | PCI Loans | Total | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2017 | ||||||||||||||||||||||||||
Commercial Banking | ||||||||||||||||||||||||||
Commercial Finance | $ | 7,971.2 | $ | 676.2 | $ | 1,111.8 | $ | 169.4 | $ | 41.5 | $ | 9,970.1 | ||||||||||||||
Real Estate Finance | 5,227.4 | 242.9 | 115.1 | 3.7 | 66.3 | 5,655.4 | ||||||||||||||||||||
Business Capital | 6,821.7 | 360.0 | 241.7 | 60.8 | – | 7,484.2 | ||||||||||||||||||||
Rail | 89.7 | 13.5 | 1.5 | – | – | 104.7 | ||||||||||||||||||||
Total Commercial Banking | 20,110.0 | 1,292.6 | 1,470.1 | 233.9 | 107.8 | �� | 23,214.4 | |||||||||||||||||||
Consumer Banking | ||||||||||||||||||||||||||
Other Consumer Banking | 335.6 | 4.7 | 25.5 | – | 2.7 | 368.5 | ||||||||||||||||||||
Total Consumer Banking | 335.6 | 4.7 | 25.5 | – | 2.7 | 368.5 | ||||||||||||||||||||
Non- Strategic Portfolios | 108.9 | 27.8 | 16.7 | 8.7 | – | 162.1 | ||||||||||||||||||||
Total | $ | 20,554.5 | $ | 1,325.1 | $ | 1,512.3 | $ | 242.6 | $ | 110.5 | $ | 23,745.0 | ||||||||||||||
December 31, 2016 | ||||||||||||||||||||||||||
Commercial Banking | ||||||||||||||||||||||||||
Commercial Finance | $ | 8,184.7 | $ | 677.6 | $ | 1,181.7 | $ | 188.8 | $ | 42.7 | $ | 10,275.5 | ||||||||||||||
Real Estate Finance | 5,191.4 | 168.7 | 115.6 | 20.4 | 70.5 | 5,566.6 | ||||||||||||||||||||
Business Capital | 6,238.7 | 422.0 | 271.7 | 41.7 | – | 6,974.1 | ||||||||||||||||||||
Rail | 88.7 | 14.1 | 0.9 | – | – | 103.7 | ||||||||||||||||||||
Total Commercial Banking | 19,703.5 | 1,282.4 | 1,569.9 | 250.9 | 113.2 | 22,919.9 | ||||||||||||||||||||
Consumer Banking | ||||||||||||||||||||||||||
Other Consumer Banking | 374.9 | 8.3 | 22.4 | – | 2.8 | 408.4 | ||||||||||||||||||||
Total Consumer Banking | 374.9 | 8.3 | 22.4 | – | 2.8 | 408.4 | ||||||||||||||||||||
Non- Strategic Portfolios | 143.7 | 36.9 | 19.1 | 10.3 | – | 210.0 | ||||||||||||||||||||
Total | $ | 20,222.1 | $ | 1,327.6 | $ | 1,611.4 | $ | 261.2 | $ | 116.0 | $ | 23,538.3 |
Commercial Loans and Held for Sale Loans — Risk Rating by Class / Segment (dollars in millions) | |||||||||||||||||||||||
Grade: | Pass | Special Mention | Classified- accruing | Classified- non-accrual | PCI Loans | Total | |||||||||||||||||
March 31, 2018 | |||||||||||||||||||||||
Commercial Banking | |||||||||||||||||||||||
Commercial Finance | $ | 8,020.5 | $ | 641.1 | $ | 1,189.0 | $ | 153.2 | $ | 10.4 | $ | 10,014.2 | |||||||||||
Real Estate Finance | 5,158.3 | 241.2 | 183.8 | — | 39.2 | 5,622.5 | |||||||||||||||||
Business Capital | 7,192.3 | 246.1 | 263.5 | 45.6 | — | 7,747.5 | |||||||||||||||||
Rail | 120.8 | 2.5 | 1.8 | — | — | 125.1 | |||||||||||||||||
Total Commercial Banking | 20,491.9 | 1,130.9 | 1,638.1 | 198.8 | 49.6 | 23,509.3 | |||||||||||||||||
Consumer Banking | |||||||||||||||||||||||
Other Consumer Banking(1) | 398.9 | 4.2 | 37.9 | — | 2.2 | 443.2 | |||||||||||||||||
Total Consumer Banking | 398.9 | 4.2 | 37.9 | — | 2.2 | 443.2 | |||||||||||||||||
Non- Strategic Portfolios | 31.5 | 9.6 | 5.2 | 12.2 | — | 58.5 | |||||||||||||||||
Total | $ | 20,922.3 | $ | 1,144.7 | $ | 1,681.2 | $ | 211.0 | $ | 51.8 | $ | 24,011.0 | |||||||||||
December 31, 2017 | |||||||||||||||||||||||
Commercial Banking | |||||||||||||||||||||||
Commercial Finance | $ | 8,284.1 | $ | 640.9 | $ | 981.9 | $ | 134.8 | $ | 10.6 | $ | 10,052.3 | |||||||||||
Real Estate Finance | 5,228.1 | 139.9 | 174.3 | 2.8 | 45.1 | 5,590.2 | |||||||||||||||||
Business Capital | 7,028.6 | 269.2 | 228.8 | 53.2 | — | 7,579.8 | |||||||||||||||||
Rail | 100.6 | 2.0 | 1.2 | — | — | 103.8 | |||||||||||||||||
Total Commercial Banking | 20,641.4 | 1,052.0 | 1,386.2 | 190.8 | 55.7 | 23,326.1 | |||||||||||||||||
Consumer Banking | |||||||||||||||||||||||
Other Consumer Banking(1) | 378.5 | 5.9 | 31.9 | — | 2.2 | 418.5 | |||||||||||||||||
Total Consumer Banking | 378.5 | 5.9 | 31.9 | — | 2.2 | 418.5 | |||||||||||||||||
Non- Strategic Portfolios | 35.7 | 7.6 | 10.2 | 9.8 | — | 63.3 | |||||||||||||||||
Total | $ | 21,055.6 | $ | 1,065.5 | $ | 1,428.3 | $ | 200.6 | $ | 57.9 | $ | 23,807.9 |
2017 for single family residential mortgage loans.
Single Family Residential | Reverse Mortgage | |||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total Single Family | Covered Loans | Total Reverse | Total Consumer | |||||||||||||||||||||||||||||||||||||||
Covered Loans | Non-covered Loans | Non-covered Loans | ||||||||||||||||||||||||||||||||||||||||
LTV Range | Non-PCI | PCI | Non-PCI | PCI | Residential | Non-PCI | Non-PCI | PCI | Mortgages | Loans | ||||||||||||||||||||||||||||||||
March 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||
Greater than 125% | $ | 2.1 | $ | 235.9 | $ | 9.8 | $ | – | $ | 247.8 | $ | 0.8 | $ | 9.0 | $ | 31.1 | $ | 40.9 | $ | 288.7 | ||||||||||||||||||||||
101% – 125% | 5.4 | 398.0 | 8.3 | – | 411.7 | 1.4 | 12.5 | 7.5 | 21.4 | 433.1 | ||||||||||||||||||||||||||||||||
80% – 100% | 180.3 | 593.5 | 41.5 | – | 815.3 | 23.2 | 42.4 | 8.0 | 73.6 | 888.9 | ||||||||||||||||||||||||||||||||
Less than 80% | 1,487.1 | 880.0 | 1,736.3 | 7.3 | 4,110.7 | 405.1 | 307.4 | 10.3 | 722.8 | 4,833.5 | ||||||||||||||||||||||||||||||||
Not Applicable(1) | – | – | 0.1 | – | 0.1 | – | – | – | – | 0.1 | ||||||||||||||||||||||||||||||||
Total | $ | 1,674.9 | $ | 2,107.4 | $ | 1,796.0 | $ | 7.3 | $ | 5,585.6 | $ | 430.5 | $ | 371.3 | $ | 56.9 | $ | 858.7 | $ | 6,444.3 | ||||||||||||||||||||||
December 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||
Greater than 125% | $ | 2.2 | $ | 261.4 | $ | 12.3 | $ | – | $ | 275.9 | $ | 0.6 | $ | 8.8 | $ | 33.8 | $ | 43.2 | $ | 319.1 | ||||||||||||||||||||||
101% – 125% | 4.7 | 443.7 | 13.6 | �� | – | 462.0 | 1.2 | 12.7 | 7.9 | 21.8 | 483.8 | |||||||||||||||||||||||||||||||
80% – 100% | 226.6 | 588.1 | 40.5 | – | 855.2 | 24.0 | 42.3 | 7.5 | 73.8 | 929.0 | ||||||||||||||||||||||||||||||||
Less than 80% | 1,515.6 | 872.4 | 1,713.1 | 9.2 | 4,110.3 | 405.4 | 304.9 | 9.8 | 720.1 | 4,830.4 | ||||||||||||||||||||||||||||||||
Not Applicable(1) | – | – | 2.9 | – | 2.9 | – | – | – | – | 2.9 | ||||||||||||||||||||||||||||||||
Total | $ | 1,749.1 | $ | 2,165.6 | $ | 1,782.4 | $ | 9.2 | $ | 5,706.3 | $ | 431.2 | $ | 368.7 | $ | 59.0 | $ | 858.9 | $ | 6,565.2 |
|
Past Due | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
30–59 Days Past Due | 60–89 Days Past Due | 90 Days or Greater | Total Past Due | Current(1) | PCI Loans(2) | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Held for Sale Loans - Delinquency Status (dollars in millions) | Loans and Held for Sale Loans - Delinquency Status (dollars in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Past Due | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
30–59 Days Past Due | 60–89 Days Past Due | 90 Days or Greater | Total Past Due | Current(1) | PCI Loans(2) | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial Banking | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial Finance | $ | 29.9 | $ | – | $ | 34.0 | $ | 63.9 | $ | 9,864.7 | $ | 41.5 | $ | 9,970.1 | $ | 17.5 | $ | — | $ | 43.8 | $ | 61.3 | $ | 9,942.5 | $ | 10.4 | $ | 10,014.2 | ||||||||||||||||||||||||||||||
Real Estate Finance | 4.4 | – | – | 4.4 | 5,584.7 | 66.3 | 5,655.4 | 10.4 | 2.9 | 4.1 | 17.4 | 5,565.9 | 39.2 | 5,622.5 | ||||||||||||||||||||||||||||||||||||||||||||
Business Capital | 109.7 | 47.3 | 21.1 | 178.1 | 7,306.1 | – | 7,484.2 | 135.8 | 24.3 | 18.0 | 178.1 | 7,569.4 | — | 7,747.5 | ||||||||||||||||||||||||||||||||||||||||||||
Rail | 9.6 | 0.6 | 0.7 | 10.9 | 93.8 | – | 104.7 | 6.5 | 0.9 | 0.8 | 8.2 | 116.9 | — | 125.1 | ||||||||||||||||||||||||||||||||||||||||||||
Total Commercial Banking | 153.6 | 47.9 | 55.8 | 257.3 | 22,849.3 | 107.8 | 23,214.4 | 170.2 | 28.1 | 66.7 | 265.0 | 23,194.7 | 49.6 | 23,509.3 | ||||||||||||||||||||||||||||||||||||||||||||
Consumer Banking | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Legacy Consumer Mortgages | 18.6 | 5.1 | 35.5 | 59.2 | 2,503.5 | 2,171.5 | 4,734.2 | 79.5 | 7.3 | 38.2 | 125.0 | 2,091.3 | 1,847.2 | 4,063.5 | ||||||||||||||||||||||||||||||||||||||||||||
Other Consumer Banking | 0.7 | – | 0.7 | 1.4 | 2,138.6 | 2.7 | 2,142.7 | 137.5 | 4.4 | 0.3 | 142.2 | 2,763.8 | 2.2 | 2,908.2 | ||||||||||||||||||||||||||||||||||||||||||||
Total Consumer Banking | 19.3 | 5.1 | 36.2 | 60.6 | 4,642.1 | 2,174.2 | 6,876.9 | 217.0 | 11.7 | 38.5 | 267.2 | 4,855.1 | 1,849.4 | 6,971.7 | ||||||||||||||||||||||||||||||||||||||||||||
Non-Strategic Portfolios | 3.5 | 1.5 | 6.5 | 11.5 | 150.6 | – | 162.1 | 0.7 | — | 12.2 | 12.9 | 45.6 | — | 58.5 | ||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 176.4 | $ | 54.5 | $ | 98.5 | $ | 329.4 | $ | 27,642.0 | $ | 2,282.0 | $ | 30,253.4 | $ | 387.9 | $ | 39.8 | $ | 117.4 | $ | 545.1 | $ | 28,095.4 | $ | 1,899.0 | $ | 30,539.5 | ||||||||||||||||||||||||||||||
December 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial Banking | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial Finance | $ | 21.4 | $ | – | $ | 17.6 | $ | 39.0 | $ | 10,193.8 | $ | 42.7 | $ | 10,275.5 | $ | 4.5 | $ | — | $ | 49.3 | $ | 53.8 | $ | 9,987.9 | $ | 10.6 | $ | 10,052.3 | ||||||||||||||||||||||||||||||
Real Estate Finance | 0.1 | – | – | 0.1 | 5,496.0 | 70.5 | 5,566.6 | 8.7 | — | 4.1 | 12.8 | 5,532.3 | 45.1 | 5,590.2 | ||||||||||||||||||||||||||||||||||||||||||||
Business Capital | 143.6 | 42.4 | 16.3 | 202.3 | 6,771.8 | – | 6,974.1 | 172.2 | 33.4 | 19.1 | 224.7 | 7,355.1 | — | 7,579.8 | ||||||||||||||||||||||||||||||||||||||||||||
Rail | 5.9 | 0.6 | 2.3 | 8.8 | 94.9 | – | 103.7 | 3.9 | 1.4 | 0.8 | 6.1 | 97.7 | — | 103.8 | ||||||||||||||||||||||||||||||||||||||||||||
Total Commercial Banking | 171.0 | 43.0 | 36.2 | 250.2 | 22,556.5 | 113.2 | 22,919.9 | 189.3 | 34.8 | 73.3 | 297.4 | 22,973.0 | 55.7 | 23,326.1 | ||||||||||||||||||||||||||||||||||||||||||||
Consumer Banking | Consumer Banking | Consumer Banking | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Legacy Consumer Mortgages | 22.6 | 6.1 | 36.6 | 65.3 | 2,563.6 | 2,233.8 | 4,862.7 | 26.7 | 7.6 | 34.8 | 69.1 | 2,219.5 | 1,903.5 | 4,192.1 | ||||||||||||||||||||||||||||||||||||||||||||
Other Consumer Banking | 7.4 | 4.9 | 0.6 | 12.9 | 2,163.4 | 2.8 | 2,179.1 | 9.6 | 0.5 | 0.4 | 10.5 | 2,615.4 | 2.2 | 2,628.1 | ||||||||||||||||||||||||||||||||||||||||||||
Total Consumer Banking | 30.0 | 11.0 | 37.2 | 78.2 | 4,727.0 | 2,236.6 | 7,041.8 | 36.3 | 8.1 | 35.2 | 79.6 | 4,834.9 | 1,905.7 | 6,820.2 | ||||||||||||||||||||||||||||||||||||||||||||
Non-Strategic Portfolios | 3.0 | 1.1 | 7.0 | 11.1 | 198.9 | – | 210.0 | 1.8 | 7.7 | 9.4 | 18.9 | 44.4 | — | 63.3 | ||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 204.0 | $ | 55.1 | $ | 80.4 | $ | 339.5 | $ | 27,482.4 | $ | 2,349.8 | $ | 30,171.7 | $ | 227.4 | $ | 50.6 | $ | 117.9 | $ | 395.9 | $ | 27,852.3 | $ | 1,961.4 | $ | 30,209.6 |
(1) | Due to their nature, reverse mortgage loans are included in Current, as they do not have contractual payments due at a specified time. During the current quarter, an immaterial error was discovered and corrected relating to the December 31, 2017 Current balance for Legacy Consumer Mortgage; which was understated by $861 million, and the Current balance for Other Consumer Banking, which was overstated by $861 million. The current presentation reflects the revised Current balances at December 31, 2017. |
(2) | PCI loans are written down at acquisition to their fair value using an estimate of cash flows deemed to be collectible. Accordingly, such loans are no longer classified as past due or non-accrual even though they may be contractually past due as we expect to fully collect the new carrying |
GROUP INC. AND SUBSIDIARIESGroup Inc. and Subsidiaries – NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNotes to Condensed Consolidated Financial Statements (Unaudited)
Loans on Non-Accrual Status (dollars in millions)(1) | Loans on Non-Accrual Status (dollars in millions)(1) | |||||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2018 | December 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Held for Investment | Held for Sale | Total | Held for Investment | Held for Sale | Total | Held for Investment | Held for Sale | Total | Held for Investment | Held for Sale | Total | |||||||||||||||||||||||||||||||||||||||
Commercial Banking | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial Finance | $ | 158.5 | $ | 10.9 | $ | 169.4 | $ | 156.7 | $ | 32.1 | $ | 188.8 | $ | 153.2 | $ | — | $ | 153.2 | $ | 134.8 | $ | — | $ | 134.8 | ||||||||||||||||||||||||||
Real Estate Finance | 3.7 | – | 3.7 | 20.4 | – | 20.4 | — | — | — | 2.8 | — | 2.8 | ||||||||||||||||||||||||||||||||||||||
Business Capital | 60.8 | – | 60.8 | 41.7 | – | 41.7 | 45.6 | — | 45.6 | 53.2 | — | 53.2 | ||||||||||||||||||||||||||||||||||||||
Total Commercial Banking | 223.0 | 10.9 | 233.9 | 218.8 | 32.1 | 250.9 | 198.8 | — | 198.8 | 190.8 | — | 190.8 | ||||||||||||||||||||||||||||||||||||||
Consumer Banking | ||||||||||||||||||||||||||||||||||||||||||||||||||
Legacy Consumer Mortgages | 15.9 | – | 15.9 | 17.3 | – | 17.3 | 25.2 | — | 25.2 | 19.9 | — | 19.9 | ||||||||||||||||||||||||||||||||||||||
Other Consumer Banking | 0.3 | – | 0.3 | 0.1 | – | 0.1 | 0.3 | — | 0.3 | 0.4 | — | 0.4 | ||||||||||||||||||||||||||||||||||||||
Total Consumer Banking | 16.2 | – | 16.2 | 17.4 | – | 17.4 | 25.5 | — | 25.5 | 20.3 | — | 20.3 | ||||||||||||||||||||||||||||||||||||||
Non-Strategic Portfolios | – | 8.7 | 8.7 | – | 10.3 | 10.3 | — | 12.2 | 12.2 | — | 9.8 | 9.8 | ||||||||||||||||||||||||||||||||||||||
Total | $ | 239.2 | $ | 19.6 | $ | 258.8 | $ | 236.2 | $ | 42.4 | $ | 278.6 | $ | 224.3 | $ | 12.2 | $ | 236.5 | $ | 211.1 | $ | 9.8 | $ | 220.9 | ||||||||||||||||||||||||||
Repossessed assets and OREO | 79.8 | 72.7 | 45.6 | 54.6 | ||||||||||||||||||||||||||||||||||||||||||||||
Total non-performing assets | $ | 338.6 | $ | 351.3 | $ | 282.1 | $ | 275.5 | ||||||||||||||||||||||||||||||||||||||||||
Commercial loans past due 90 days or more accruing | Commercial loans past due 90 days or more accruing | $ | 4.3 | $ | 7.2 | Commercial loans past due 90 days or more accruing | $ | 9.9 | $ | 11.7 | ||||||||||||||||||||||||||||||||||||||||
Consumer loans past due 90 days or more accruing | Consumer loans past due 90 days or more accruing | 22.2 | 24.8 | Consumer loans past due 90 days or more accruing | 17.1 | 20.2 | ||||||||||||||||||||||||||||||||||||||||||||
Total Accruing loans past due 90 days or more | Total Accruing loans past due 90 days or more | $ | 26.5 | $ | 32.0 | Total Accruing loans past due 90 days or more | $ | 27.0 | $ | 31.9 |
(1) | Factored receivables within our Business Capital division do not accrue interest and therefore are not considered within non-accrual loan |
March 31, 2017 | December 31, 2016 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
PCI | $ | 190.8 | $ | 201.7 | ||||||
Non-PCI | 107.8 | 106.3 | ||||||||
Loans in process of foreclosure | $ | 298.6 | $ | 308.0 | ||||||
OREO | $ | 66.3 | $ | 69.9 |
Loans in Process of Foreclosure and OREO (dollars in millions)(1) | |||||||
March 31, 2018 | December 31, 2017 | ||||||
PCI | $ | 134.5 | $ | 133.7 | |||
Non-PCI | 138.2 | 140.9 | |||||
Loans in process of foreclosure | $ | 272.7 | $ | 274.6 | |||
OREO | $ | 43.1 | $ | 52.1 |
(1) | As of March 31, 2018 and December 31, 2017, the table included $120.4 million and $122.5 million of reverse mortgage loans in the process of foreclosure and $17.2 million and $21.0 million of reverse mortgage OREO, respectively. |
Average Recorded Investment(3) | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Recorded Investment | Unpaid Principal Balance | Related Allowance | Quarter Ended March 31, 2017 | Quarter Ended March 31, 2016 | |||||||||||||||||||
March 31, 2017 | |||||||||||||||||||||||
With no related allowance recorded: | |||||||||||||||||||||||
Commercial Banking | |||||||||||||||||||||||
Commercial Finance | $ | 64.5 | $ | 75.8 | $ | – | $ | 59.4 | $ | 12.8 | |||||||||||||
Business Capital | 9.4 | 10.6 | – | 4.9 | 7.0 | ||||||||||||||||||
Real Estate Finance | 0.7 | 0.7 | – | 0.7 | 2.2 | ||||||||||||||||||
With an allowance recorded: | |||||||||||||||||||||||
Commercial Banking | |||||||||||||||||||||||
Commercial Finance | 134.8 | 134.9 | 23.8 | 138.9 | 120.5 | ||||||||||||||||||
Business Capital | 27.7 | 27.8 | 15.3 | 17.2 | 11.3 | ||||||||||||||||||
Real Estate Finance | 3.0 | 3.0 | 0.4 | 9.8 | 1.6 | ||||||||||||||||||
Total Impaired Loans(1) | 240.1 | 252.8 | 39.5 | 230.9 | 155.4 | ||||||||||||||||||
Total Loans Impaired at Acquisition Date and Convenience Date(2) | 2,282.0 | 3,329.3 | 14.8 | 2,316.0 | 2,626.3 | ||||||||||||||||||
Total | $ | 2,522.1 | $ | 3,582.1 | $ | 54.3 | $ | 2,546.9 | $ | 2,781.7 | |||||||||||||
December 31, 2016 | |||||||||||||||||||||||
With no related allowance recorded: | |||||||||||||||||||||||
Commercial Banking | |||||||||||||||||||||||
Commercial Finance | $ | 54.3 | $ | 72.2 | $ | – | $ | 29.5 | |||||||||||||||
Business Capital | 0.5 | 1.8 | – | 5.1 | |||||||||||||||||||
Real Estate Finance | 0.7 | 0.7 | – | 1.3 | |||||||||||||||||||
With an allowance recorded: | |||||||||||||||||||||||
Commercial Banking | |||||||||||||||||||||||
Commercial Finance | 143.0 | 146.2 | 25.5 | 132.1 | |||||||||||||||||||
Business Capital | 6.6 | 6.6 | 4.2 | 8.2 | |||||||||||||||||||
Real Estate Finance | 16.7 | 16.8 | 4.0 | 5.2 | |||||||||||||||||||
Total Impaired Loans(1) | 221.8 | 244.3 | 33.7 | 181.4 | |||||||||||||||||||
Total Loans Impaired at Acquisition Date and Convenience Date(2) | 2,349.8 | 3,440.7 | 13.6 | 2,504.4 | |||||||||||||||||||
Total | $ | 2,571.6 | $ | 3,685.0 | $ | 47.3 | $ | 2,685.8 |
Impaired Loans (dollars in millions) | |||||||||||||||||||
Average Recorded Investment(3) | |||||||||||||||||||
Recorded Investment | Unpaid Principal Balance | Related Allowance | Quarter Ended March 31, 2018 | Quarter Ended March 31, 2017 | |||||||||||||||
March 31, 2018 | |||||||||||||||||||
With no related allowance recorded: | |||||||||||||||||||
Commercial Banking | |||||||||||||||||||
Commercial Finance | $ | 90.6 | $ | 136.7 | $ | — | $ | 71.3 | $ | 59.4 | |||||||||
Business Capital | 10.9 | 13.0 | — | 11.3 | 4.9 | ||||||||||||||
Real Estate Finance | — | — | — | — | 0.7 | ||||||||||||||
With an allowance recorded: | |||||||||||||||||||
Commercial Banking | |||||||||||||||||||
Commercial Finance | 74.8 | 80.3 | 21.4 | 85.3 | 138.9 | ||||||||||||||
Business Capital | 7.9 | 7.9 | 3.9 | 9.2 | 17.2 | ||||||||||||||
Real Estate Finance | — | — | — | 1.4 | 9.8 | ||||||||||||||
Total Impaired Loans(1) | 184.2 | 237.9 | 25.3 | 178.5 | 230.9 | ||||||||||||||
Total Loans Impaired at Acquisition Date(2) | 1,899.0 | 2,778.5 | 19.2 | 1,930.2 | 2,316.0 | ||||||||||||||
Total | $ | 2,083.2 | $ | 3,016.4 | $ | 44.5 | $ | 2,108.7 | $ | 2,546.9 | |||||||||
December 31, 2017 | |||||||||||||||||||
With no related allowance recorded: | |||||||||||||||||||
Commercial Banking | |||||||||||||||||||
Commercial Finance | $ | 51.9 | $ | 72.7 | $ | — | $ | 59.9 | |||||||||||
Business Capital | 11.7 | 13.4 | — | 5.7 | |||||||||||||||
Real Estate Finance | — | — | — | 0.4 | |||||||||||||||
With an allowance recorded: | |||||||||||||||||||
Commercial Banking | |||||||||||||||||||
Commercial Finance | 95.9 | 96.1 | 21.3 | 136.6 | |||||||||||||||
Business Capital | 10.5 | 10.5 | 4.3 | 14.2 | |||||||||||||||
Real Estate Finance | 2.7 | 2.8 | 0.4 | 5.6 | |||||||||||||||
Total Impaired Loans(1) | 172.7 | 195.5 | 26.0 | 222.4 | |||||||||||||||
Total Loans Impaired at Acquisition Date(2) | 1,961.4 | 2,870.2 | 19.1 | 2,168.8 | |||||||||||||||
Total | $ | 2,134.1 | $ | 3,065.7 | $ | 45.1 | $ | 2,391.2 |
(1) |
(2) | Details of finance |
(3) | Average recorded investment for the |
March 31, 2017 | Unpaid Principal Balance | Carrying Value | Allowance for Loan Losses | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Commercial Banking | ||||||||||||||
Commercial Finance | $ | 67.9 | $ | 41.5 | $ | 1.9 | ||||||||
Real Estate Finance | 96.8 | 66.3 | 5.8 | |||||||||||
Consumer Banking | ||||||||||||||
Other Consumer Banking | 3.6 | 2.7 | – | |||||||||||
Legacy Consumer Mortgages | 3,161.0 | 2,171.5 | 7.1 | |||||||||||
$ | 3,329.3 | $ | 2,282.0 | $ | 14.8 | |||||||||
December 31, 2016 | ||||||||||||||
Commercial Banking | ||||||||||||||
Commercial Finance | $ | 70.0 | $ | 42.7 | $ | 2.4 | ||||||||
Real Estate Finance | 108.1 | 70.5 | 4.9 | |||||||||||
Consumer Banking | ||||||||||||||
Other Consumer Banking | 3.7 | 2.8 | – | |||||||||||
Legacy Consumer Mortgages | 3,258.9 | 2,233.8 | 6.3 | |||||||||||
$ | 3,440.7 | $ | 2,349.8 | $ | 13.6 |
Purchased Credit Impaired Loans (dollars in millions) | |||||||||||
March 31, 2018 | Unpaid Principal Balance | Carrying Value | Allowance for Loan Losses | ||||||||
Commercial Banking | |||||||||||
Commercial Finance | $ | 16.3 | $ | 10.4 | $ | 0.8 | |||||
Real Estate Finance | 49.4 | 39.2 | 7.0 | ||||||||
Consumer Banking | |||||||||||
Other Consumer Banking | 2.8 | 2.2 | — | ||||||||
Legacy Consumer Mortgages | 2,710.0 | 1,847.2 | 11.4 | ||||||||
$ | 2,778.5 | $ | 1,899.0 | $ | 19.2 | ||||||
December 31, 2017 | |||||||||||
Commercial Banking | |||||||||||
Commercial Finance | $ | 16.4 | $ | 10.6 | $ | 0.7 | |||||
Real Estate Finance | 60.1 | 45.1 | 7.0 | ||||||||
Consumer Banking | |||||||||||
Other Consumer Banking | 3.0 | 2.2 | — | ||||||||
Legacy Consumer Mortgages | 2,790.7 | 1,903.5 | 11.4 | ||||||||
$ | 2,870.2 | $ | 1,961.4 | $ | 19.1 |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(dollars in millions) | Non- criticized | Criticized | Total | Non- criticized | Criticized | Total | |||||||||||||||||||||
Commercial Finance | $ | 5.1 | $ | 36.4 | $ | 41.5 | $ | 5.4 | $ | 37.3 | $ | 42.7 | |||||||||||||||
Real Estate Finance | 32.9 | 33.4 | 66.3 | 35.6 | 34.9 | 70.5 | |||||||||||||||||||||
Total | $ | 38.0 | $ | 69.8 | $ | 107.8 | $ | 41.0 | $ | 72.2 | $ | 113.2 |
March 31, 2018 | December 31, 2017 | ||||||||||||||||||||||
(dollars in millions) | Non- criticized | Criticized | Total | Non- criticized | Criticized | Total | |||||||||||||||||
Commercial Finance | $ | — | $ | 10.4 | $ | 10.4 | $ | — | $ | 10.6 | $ | 10.6 | |||||||||||
Real Estate Finance | 20.4 | 18.8 | 39.2 | 21.8 | 23.3 | 45.1 | |||||||||||||||||
Total | $ | 20.4 | $ | 29.2 | $ | 49.6 | $ | 21.8 | $ | 33.9 | $ | 55.7 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
▪ | The nature of modifications qualifying as TDR’s based upon recorded investment at March 31, |
▪ | Payment deferrals result in lower net present value of cash flows, if not accompanied by additional interest or fees, and increased provision for credit losses to the extent applicable. The financial impact of these modifications is not significant given the moderate length of deferral periods. |
▪ | Interest rate reductions result in lower amounts of interest being charged to the customer, but are a relatively small part of the Company’s restructuring programs. |
▪ | Debt forgiveness, or the reduction in amount owed by borrower, results in incremental provision for credit losses, in the form of higher charge-offs. While these types of modifications have the greatest individual impact on the allowance, the amounts of principal forgiveness for TDRs occurring during quarters ended March 31, |
▪ | The other elements of the Company’s modification programs that are not TDRs, do not have a significant impact on financial results given their relative size, or do not have a direct financial impact, as in the case of covenant changes. |
Year Ending: | ||||||
---|---|---|---|---|---|---|
2017 | $ | 11.3 | ||||
2018 | 11.4 | |||||
2019 | 9.4 | |||||
2020 | 7.8 | |||||
2021 | 6.4 | |||||
Years 2022 – 2026 | 17.4 | |||||
Years 2027 – 2031 | 5.3 | |||||
Years 2032 – 2036 | 1.4 | |||||
Thereafter | 0.3 | |||||
Total(1),(2) | $ | 70.7 |
Allowance for Loan Losses and Recorded Investment in Loans (dollars in millions) | |||||||||||||||||||||||
Commercial Banking | Consumer Banking | Total | Commercial Banking | Consumer Banking | Total | ||||||||||||||||||
Quarter Ended March 31, 2018 | Quarter Ended March 31, 2017 | ||||||||||||||||||||||
Balance - beginning of period | $ | 402.2 | $ | 28.9 | $ | 431.1 | $ | 408.4 | $ | 24.2 | $ | 432.6 | |||||||||||
Provision for credit losses | 67.2 | 1.6 | 68.8 | 49.2 | 0.5 | 49.7 | |||||||||||||||||
Other(1) | (2.4 | ) | — | (2.4 | ) | (6.2 | ) | — | (6.2 | ) | |||||||||||||
Gross charge-offs(2) | (54.6 | ) | (0.5 | ) | (55.1 | ) | (32.4 | ) | (0.6 | ) | (33.0 | ) | |||||||||||
Recoveries | 4.8 | 0.4 | 5.2 | 5.0 | 0.5 | 5.5 | |||||||||||||||||
Balance - end of period | $ | 417.2 | $ | 30.4 | $ | 447.6 | $ | 424.0 | $ | 24.6 | $ | 448.6 | |||||||||||
Allowance balance at March 31, 2018 | Allowance balance at March 31, 2017 | ||||||||||||||||||||||
Loans individually evaluated for impairment | $ | 25.3 | $ | — | $ | 25.3 | $ | 39.5 | $ | — | $ | 39.5 | |||||||||||
Loans collectively evaluated for impairment | 384.1 | 19.0 | 403.1 | 376.8 | 17.5 | 394.3 | |||||||||||||||||
Loans acquired with deteriorated credit quality(3) | 7.8 | 11.4 | 19.2 | 7.7 | 7.1 | 14.8 | |||||||||||||||||
Allowance for loan losses | $ | 417.2 | $ | 30.4 | $ | 447.6 | $ | 424.0 | $ | 24.6 | $ | 448.6 | |||||||||||
Other reserves(1) | $ | 46.9 | $ | — | $ | 46.9 | $ | 49.9 | $ | — | $ | 49.9 | |||||||||||
Loans at March 31, 2018 | Loans at March 31, 2017 | ||||||||||||||||||||||
Loans individually evaluated for impairment | $ | 184.2 | $ | — | $ | 184.2 | $ | 240.1 | $ | — | $ | 240.1 | |||||||||||
Loans collectively evaluated for impairment | 23,112.1 | 4,258.3 | 27,370.4 | 22,530.7 | 4,638.6 | 27,169.3 | |||||||||||||||||
Loans acquired with deteriorated credit quality(3) | 49.6 | 1,849.4 | 1,899.0 | 107.8 | 2,174.2 | 2,282.0 | |||||||||||||||||
Ending balance | $ | 23,345.9 | $ | 6,107.7 | $ | 29,453.6 | $ | 22,878.6 | $ | 6,812.8 | $ | 29,691.4 | |||||||||||
Percent of loans to total loans | 79.3 | % | 20.7 | % | 100 | % | 77.1 | % | 22.9 | % | 100 | % |
Commercial Banking | Consumer Banking | Total | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Quarter Ended March 31, 2017 | |||||||||||||||
Balance — December 31, 2016 | $ | 408.4 | $ | 24.2 | $ | 432.6 | |||||||||
Provision for credit losses | 49.2 | 0.5 | 49.7 | ||||||||||||
Other(1) | (6.2 | ) | – | (6.2 | ) | ||||||||||
Gross charge-offs(2) | (32.4 | ) | (0.6 | ) | (33.0 | ) | |||||||||
Recoveries | 5.0 | 0.5 | 5.5 | ||||||||||||
Balance — March 31, 2017 | $ | 424.0 | $ | 24.6 | $ | 448.6 | |||||||||
Allowance balance at March 31, 2017 | |||||||||||||||
Loans individually evaluated for impairment | $ | 39.5 | $ | – | $ | 39.5 | |||||||||
Loans collectively evaluated for impairment | 376.8 | 17.5 | 394.3 | ||||||||||||
Loans acquired with deteriorated credit quality(3) | 7.7 | 7.1 | 14.8 | ||||||||||||
Allowance for loan losses | $ | 424.0 | $ | 24.6 | $ | 448.6 | |||||||||
Other reserves(1) | $ | 49.9 | $ | – | $ | 49.9 | |||||||||
Finance receivables at March 31, 2017 | |||||||||||||||
Loans individually evaluated for impairment | $ | 240.1 | $ | – | $ | 240.1 | |||||||||
Loans collectively evaluated for impairment | 22,530.7 | 4,638.6 | 27,169.3 | ||||||||||||
Loans acquired with deteriorated credit quality(3) | 107.8 | 2,174.2 | 2,282.0 | ||||||||||||
Ending balance | $ | 22,878.6 | $ | 6,812.8 | $ | 29,691.4 | |||||||||
Percent of loans to total loans | 77.1 | % | 22.9 | % | 100 | % |
Commercial Banking | Consumer Banking | Total | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Quarter Ended March 31, 2016 | |||||||||||||||
Balance — December 31, 2015 | $ | 336.7 | $ | 10.2 | $ | 346.9 | |||||||||
Provision for credit losses | 86.4 | 3.1 | 89.5 | ||||||||||||
Other(1) | (5.0 | ) | 1.4 | (3.6 | ) | ||||||||||
Gross charge-offs(2) | (36.1 | ) | (0.7 | ) | (36.8 | ) | |||||||||
Recoveries | 4.0 | 0.8 | 4.8 | ||||||||||||
Balance — March 31, 2016 | $ | 386.0 | $ | 14.8 | $ | 400.8 | |||||||||
Allowance balance at March 31, 2016 | |||||||||||||||
Loans individually evaluated for impairment | $ | 40.2 | $ | – | $ | 40.2 | |||||||||
Loans collectively evaluated for impairment | 342.8 | 13.5 | 356.3 | ||||||||||||
Loans acquired with deteriorated credit quality(3) | 3.0 | 1.3 | 4.3 | ||||||||||||
Allowance for loan losses | $ | 386.0 | $ | 14.8 | $ | 400.8 | |||||||||
Other reserves(1) | $ | 48.1 | $ | 0.1 | $ | 48.2 | |||||||||
Finance receivables at March 31, 2016 | |||||||||||||||
Loans individually evaluated for impairment | $ | 176.7 | $ | – | $ | 176.7 | |||||||||
Loans collectively evaluated for impairment | 23,466.1 | 4,750.0 | 28,216.1 | ||||||||||||
Loans acquired with deteriorated credit quality(3) | 136.9 | 2,419.0 | 2,555.9 | ||||||||||||
Ending balance | $ | 23,779.7 | $ | 7,169.0 | $ | 30,948.7 | |||||||||
Percentage of loans to total loans | 76.8 | % | 23.2 | % | 100 | % |
(1) | “Other reserves” represents |
(2) | Gross charge-offs of amounts specifically reserved in prior periods that were charged directly to the Allowance for loan losses included |
(3) | Represents loans considered impaired as part of the OneWest transaction and are accounted for under the guidance in ASC 310-30 (Loans and Debt Securities Acquired with Deteriorated Credit Quality). |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Investment Securities (dollars in millions) | |||||||
March 31, 2018 | December 31, 2017 | ||||||
Available-for-sale securities | |||||||
Debt securities | $ | 5,564.1 | $ | 6,123.6 | |||
Securities carried at fair value with changes recorded in net income | |||||||
Debt securities | — | 0.4 | |||||
Equity securities(1) | 44.1 | 44.7 | |||||
Non-marketable investments(2) | 302.3 | 301.2 | |||||
Total investment securities | $ | 5,910.5 | $ | 6,469.9 |
March 31, 2017 | December 31, 2016 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Available-for-sale securities | ||||||||||
Debt securities | $ | 3,696.8 | $ | 3,674.1 | ||||||
Equity securities | 34.2 | 34.1 | ||||||||
Held-to-maturity securities | ||||||||||
Debt securities(1) | 226.9 | 243.0 | ||||||||
Securities carried at fair value with changes recorded in net income | ||||||||||
Debt securities | 268.9 | 283.5 | ||||||||
Non-marketable investments(2) | 249.5 | 256.4 | ||||||||
Total investment securities | $ | 4,476.3 | $ | 4,491.1 |
Quarters Ended March 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2017 | 2016 | ||||||||||
Interest income — investments | $ | 27.8 | $ | 19.2 | |||||||
Interest income — interest bearing deposits | 12.5 | 8.4 | |||||||||
Dividends — investments | 3.3 | 3.4 | |||||||||
Total interest and dividends | $ | 43.6 | $ | 31.0 |
Interest and Dividend Income (dollars in millions) | |||||||
Quarters Ended March 31, | |||||||
2018 | 2017 | ||||||
Interest income — debt securities | $ | 40.5 | $ | 27.8 | |||
Interest income — interest bearing deposits | 7.0 | 12.5 | |||||
Dividends — equity securities | 2.8 | 3.3 | |||||
Total interest and dividends | $ | 50.3 | $ | 43.6 |
Amortized Cost and Fair Value (dollars in millions) | |||||||||||||||
March 31, 2018 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
Debt securities AFS | |||||||||||||||
Mortgage-backed securities | |||||||||||||||
U.S. government agency securities | $ | 4,865.4 | $ | 0.4 | $ | (139.4 | ) | $ | 4,726.4 | ||||||
Non-agency securities | 225.6 | 18.4 | — | 244.0 | |||||||||||
U.S. government agency obligations | 25.0 | — | (0.4 | ) | 24.6 | ||||||||||
U.S. Treasury securities | 443.7 | — | (4.4 | ) | 439.3 | ||||||||||
Supranational securities | 49.9 | — | (0.7 | ) | 49.2 | ||||||||||
State & municipal bonds | 13.6 | — | (0.3 | ) | 13.3 | ||||||||||
Corporate bonds - foreign | 65.7 | 1.6 | — | 67.3 | |||||||||||
Total debt securities AFS | $ | 5,688.9 | $ | 20.4 | $ | (145.2 | ) | $ | 5,564.1 | ||||||
December 31, 2017 | |||||||||||||||
Debt securities AFS | |||||||||||||||
Mortgage-backed securities | |||||||||||||||
U.S. government agency securities | $ | 5,010.2 | $ | 2.1 | $ | (62.1 | ) | $ | 4,950.2 | ||||||
Non-agency securities | 297.3 | 21.7 | (0.5 | ) | 318.5 | ||||||||||
U.S. government agency obligations | 25.0 | — | (0.2 | ) | 24.8 | ||||||||||
U.S. Treasury securities | 297.7 | 0.2 | (0.2 | ) | 297.7 | ||||||||||
Supranational securities | 449.8 | — | (0.3 | ) | 449.5 | ||||||||||
State & municipal bonds | 16.2 | — | (0.4 | ) | 15.8 | ||||||||||
Corporate bonds - foreign | 65.7 | 1.4 | — | 67.1 | |||||||||||
Total debt securities AFS | 6,161.9 | 25.4 | (63.7 | ) | 6,123.6 | ||||||||||
Equity securities AFS | 45.8 | — | (1.1 | ) | 44.7 | ||||||||||
Total securities AFS | $ | 6,207.7 | $ | 25.4 | $ | (64.8 | ) | $ | 6,168.3 |
March 31, 2017 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Debt securities AFS | ||||||||||||||||||
Mortgage-backed Securities | ||||||||||||||||||
U.S. government agency securities | $ | 2,514.0 | $ | 1.9 | $ | (34.7 | ) | $ | 2,481.2 | |||||||||
Non-agency securities | 449.8 | 21.9 | (1.2 | ) | 470.5 | |||||||||||||
U.S. government agency obligations | 649.9 | – | (4.2 | ) | 645.7 | |||||||||||||
U.S. Treasury Securities | 99.8 | – | (0.4 | ) | 99.4 | |||||||||||||
Total debt securities AFS | 3,713.5 | 23.8 | (40.5 | ) | 3,696.8 | |||||||||||||
Equity securities AFS | 35.2 | – | (1.0 | ) | 34.2 | |||||||||||||
Total securities AFS | $ | 3,748.7 | $ | 23.8 | $ | (41.5 | ) | $ | 3,731.0 | |||||||||
December 31, 2016 | ||||||||||||||||||
Debt securities AFS | ||||||||||||||||||
Mortgage-backed Securities | ||||||||||||||||||
U.S. government agency securities | $ | 2,073.6 | $ | 1.6 | $ | (32.3 | ) | $ | 2,042.9 | |||||||||
Non-agency securities | 471.7 | 15.6 | (1.8 | ) | 485.5 | |||||||||||||
U.S. government agency obligations | 649.9 | – | (3.9 | ) | 646.0 | |||||||||||||
U.S. Treasury Securities | 299.9 | – | (0.4 | ) | 299.5 | |||||||||||||
Supranational and foreign government securities | 200.2 | – | – | 200.2 | ||||||||||||||
Total debt securities AFS | 3,695.3 | 17.2 | (38.4 | ) | 3,674.1 | |||||||||||||
Equity securities AFS | 35.0 | – | (0.9 | ) | 34.1 | |||||||||||||
Total securities AFS | $ | 3,730.3 | $ | 17.2 | $ | (39.3 | ) | $ | 3,708.2 |
Maturities - Debt Securities AFS (dollars in millions) | ||||||||||
March 31, 2018 | ||||||||||
Amortized Cost | Fair Value | Weighted Average Yield | ||||||||
Mortgage-backed securities — U.S. government agency securities | ||||||||||
After 5 but within 10 years | $ | 172.3 | $ | 168.6 | 2.12 | % | ||||
Due after 10 years | 4,693.1 | 4,557.8 | 2.56 | % | ||||||
Total | 4,865.4 | 4,726.4 | 2.54 | % | ||||||
Mortgage-backed securities — non-agency securities | ||||||||||
After 1 but within 5 years | 12.0 | 12.1 | 5.16 | % | ||||||
After 5 but within 10 years | 5.3 | 5.7 | 4.68 | % | ||||||
Due after 10 years | 208.3 | 226.2 | 5.83 | % | ||||||
Total | 225.6 | 244.0 | 5.76 | % | ||||||
U.S. government agency obligations | ||||||||||
After 1 but within 5 years | 25.0 | 24.6 | 2.26 | % | ||||||
Total | 25.0 | 24.6 | 2.26 | % | ||||||
U.S. Treasury securities | ||||||||||
Due within 1 year | 248.1 | 247.8 | 1.53 | % | ||||||
After 5 but within 10 years | 195.6 | 191.5 | 2.51 | % | ||||||
Total | 443.7 | 439.3 | 1.96 | % | ||||||
Supranational securities | ||||||||||
After 1 but within 5 years | 49.9 | 49.2 | 2.02 | % | ||||||
Total | 49.9 | 49.2 | 2.02 | % | ||||||
State & municipal bonds | ||||||||||
Due within 1 year | 0.1 | 0.1 | 2.36 | % | ||||||
After 1 but within 5 years | 0.1 | 0.1 | 2.56 | % | ||||||
After 5 but within 10 years | 0.3 | 0.3 | 2.70 | % | ||||||
Due after 10 years | 13.1 | 12.8 | 2.38 | % | ||||||
Total | 13.6 | 13.3 | 2.39 | % | ||||||
Corporate bonds - foreign | ||||||||||
After 1 but within 5 years | 65.7 | 67.3 | 6.11 | % | ||||||
Total | 65.7 | 67.3 | 6.11 | % | ||||||
Total debt securities AFS | $ | 5,688.9 | $ | 5,564.1 | 2.66 | % |
March 31, 2017 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Amortized Cost | Fair Value | Weighted Average Yield | ||||||||||||
Mortgage-backed securities — U.S. government agency securities | ||||||||||||||
After 5 but within 10 years | $ | 52.2 | $ | 51.4 | 1.56 | % | ||||||||
Due after 10 years | 2,461.8 | 2,429.8 | 2.49 | % | ||||||||||
Total | 2,514.0 | 2,481.2 | 2.47 | % | ||||||||||
Mortgage-backed securities — non-agency securities | ||||||||||||||
After 5 but within 10 years | 22.0 | 21.5 | 4.93 | % | ||||||||||
Due after 10 years | 427.8 | 449.0 | 5.91 | % | ||||||||||
Total | 449.8 | 470.5 | 5.86 | % | ||||||||||
U.S. government agency obligations | ||||||||||||||
After 1 but within 5 years | 649.9 | 645.7 | 1.22 | % | ||||||||||
Total | 649.9 | 645.7 | 1.22 | % | ||||||||||
U.S. Treasury Securities | ||||||||||||||
After 1 but within 5 years | 99.8 | 99.4 | 0.93 | % | ||||||||||
Total | 99.8 | 99.4 | 0.93 | % | ||||||||||
Total debt securities available-for-sale | $ | 3,713.5 | $ | 3,696.8 | 2.62 | % |
Gross Unrealized Loss (dollars in millions) | |||||||||||||||
March 31, 2018 | |||||||||||||||
Less than 12 months | 12 months or greater | ||||||||||||||
Fair Value | Gross Unrealized Loss | Fair Value | Gross Unrealized Loss | ||||||||||||
Debt securities AFS | |||||||||||||||
Mortgage-backed securities | |||||||||||||||
U.S. government agency securities | $ | 3,567.3 | $ | (82.3 | ) | $ | 1,133.7 | $ | (57.1 | ) | |||||
U.S. government agency obligations | 24.6 | (0.4 | ) | — | — | ||||||||||
U.S. Treasury securities | 439.3 | (4.4 | ) | — | — | ||||||||||
State & municipal bonds | 2.0 | — | 11.1 | (0.3 | ) | ||||||||||
Supranational securities | 49.2 | (0.7 | ) | — | — | ||||||||||
Total debt securities AFS | $ | 4,082.4 | $ | (87.8 | ) | $ | 1,144.8 | $ | (57.4 | ) |
March 31, 2017 | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Less than 12 months | 12 months or greater | ||||||||||||||||||
Fair Value | Gross Unrealized Loss | Fair Value | Gross Unrealized Loss | ||||||||||||||||
Debt securities AFS | |||||||||||||||||||
Mortgage-backed securities | |||||||||||||||||||
U.S. government agency securities | $ | 1,883.2 | $ | (34.2 | ) | $ | 13.5 | $ | (0.5 | ) | |||||||||
Non-agency securities | 24.4 | (0.9 | ) | 4.6 | (0.3 | ) | |||||||||||||
U.S. government agency obligations | 545.8 | (4.2 | ) | – | – | ||||||||||||||
U.S. Treasury Securities | 99.4 | (0.4 | ) | – | – | ||||||||||||||
Total debt securities AFS | 2,552.8 | (39.7 | ) | 18.1 | (0.8 | ) | |||||||||||||
Equity securities AFS | 34.0 | (0.8 | ) | 0.2 | (0.2 | ) | |||||||||||||
Total securities available-for-sale | $ | 2,586.8 | $ | (40.5 | ) | $ | 18.3 | $ | (1.0 | ) |
December 31, 2016 | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Less than 12 months | 12 months or greater | ||||||||||||||||||
Fair Value | Gross Unrealized Loss | Fair Value | Gross Unrealized Loss | ||||||||||||||||
Debt securities AFS | |||||||||||||||||||
Mortgage-backed securities | |||||||||||||||||||
U.S. government agency securities | $ | 1,589.6 | $ | (31.8 | ) | $ | 13.8 | $ | (0.5 | ) | |||||||||
Non-agency securities | 56.5 | (1.4 | ) | 15.8 | (0.4 | ) | |||||||||||||
U.S. government agency obligations | 546.1 | (3.9 | ) | – | – | ||||||||||||||
U.S. Treasury Securities | 299.5 | (0.4 | ) | – | – | ||||||||||||||
Total debt securities AFS | 2,491.7 | (37.5 | ) | 29.6 | (0.9 | ) | |||||||||||||
Equity securities AFS | 34.1 | (0.9 | ) | – | – | ||||||||||||||
Total securities available-for-sale | $ | 2,525.8 | $ | (38.4 | ) | $ | 29.6 | $ | (0.9 | ) |
December 31, 2017 | |||||||||||||||
Less than 12 months | 12 months or greater | ||||||||||||||
Fair Value | Gross Unrealized Loss | Fair Value | Gross Unrealized Loss | ||||||||||||
Debt securities AFS | |||||||||||||||
Mortgage-backed securities | |||||||||||||||
U.S. government agency securities | $ | 3,492.2 | $ | (30.9 | ) | $ | 1,151.4 | $ | (31.2 | ) | |||||
Non-agency securities | 2.1 | — | 0.4 | (0.5 | ) | ||||||||||
U.S. government agency obligations | 24.8 | (0.2 | ) | — | — | ||||||||||
U.S. Treasury securities | 199.1 | (0.2 | ) | — | — | ||||||||||
State & municipal bonds | — | — | 13.6 | (0.4 | ) | ||||||||||
Supranational securities | 349.5 | (0.3 | ) | — | — | ||||||||||
Total debt securities AFS | 4,067.7 | (31.6 | ) | 1,165.4 | (32.1 | ) | |||||||||
Equity securities AFS | 0.1 | (0.2 | ) | 44.5 | (0.9 | ) | |||||||||
Total securities available-for-sale | $ | 4,067.8 | $ | (31.8 | ) | $ | 1,209.9 | $ | (33.0 | ) |
2017:
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2017 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mortgage-backed Securities — Non-agency | $ | 260.4 | $ | 9.2 | $ | (0.7 | ) | $ | 268.9 | ||||||||||
Total securities held at fair value with changes recorded in net income | $ | 260.4 | $ | 9.2 | $ | (0.7 | ) | $ | 268.9 | ||||||||||
December 31, 2016 | |||||||||||||||||||
Mortgage-backed Securities — Non-agency | $ | 277.5 | $ | 6.7 | $ | (0.7 | ) | $ | 283.5 | ||||||||||
Total securities held at fair value with changes recorded in net income | $ | 277.5 | $ | 6.7 | $ | (0.7 | ) | $ | 283.5 |
March 31, 2017 | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Amortized Cost | Fair Value | Weighted Average Yield | |||||||||||||
Mortgage-backed securities — non-agency securities | |||||||||||||||
After 5 but within 10 years | $ | 0.3 | $ | 0.3 | 41.82 | % | |||||||||
Due after 10 years | 260.1 | 268.6 | 4.90 | % | |||||||||||
Total | $ | 260.4 | $ | 268.9 | 4.94 | % |
Carrying Value | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2017 | ||||||||||||||||||
Mortgage-backed securities | ||||||||||||||||||
U.S. government agency securities | $ | 102.4 | $ | 0.5 | $ | (3.1 | ) | $ | 99.8 | |||||||||
State and municipal | 18.9 | – | (0.4 | ) | 18.5 | |||||||||||||
Foreign government | 2.4 | – | – | 2.4 | ||||||||||||||
Corporate — foreign | 103.2 | 6.5 | – | 109.7 | ||||||||||||||
Total debt securities held-to-maturity | $ | 226.9 | $ | 7.0 | $ | (3.5 | ) | $ | 230.4 | |||||||||
December 31, 2016 | ||||||||||||||||||
Mortgage-backed securities | ||||||||||||||||||
U.S. government agency securities | $ | 110.0 | $ | 0.7 | $ | (3.3 | ) | $ | 107.4 | |||||||||
State and municipal | 27.7 | – | (0.5 | ) | 27.2 | |||||||||||||
Foreign government | 2.4 | – | – | 2.4 | ||||||||||||||
Corporate — foreign | 102.9 | 6.2 | – | 109.1 | ||||||||||||||
Total debt securities held-to-maturity | $ | 243.0 | $ | 6.9 | $ | (3.8 | ) | $ | 246.1 |
March 31, 2017 | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Amortized Cost | Fair Value | Weighted Average Yield | |||||||||||||
Mortgage-backed securities — U.S. government agency securities | |||||||||||||||
Due after 10 years | $ | 102.4 | $ | 99.8 | 2.49 | % | |||||||||
Total | 102.4 | 99.8 | 2.49 | % | |||||||||||
State and municipal | |||||||||||||||
Due within 1 year | 0.4 | 0.4 | 2.09 | % | |||||||||||
After 1 but within 5 years | 0.3 | 0.3 | 2.46 | % | |||||||||||
After 5 but within 10 years | 0.4 | 0.4 | 2.70 | % | |||||||||||
Due after 10 years | 17.8 | 17.4 | 2.33 | % | |||||||||||
Total | 18.9 | 18.5 | 2.34 | % | |||||||||||
Foreign government | |||||||||||||||
Due within 1 year | 2.4 | 2.4 | 2.43 | % | |||||||||||
Total | 2.4 | 2.4 | 2.43 | % | |||||||||||
Corporate — Foreign securities | |||||||||||||||
After 1 but within 5 years | 103.2 | 109.7 | 4.25 | % | |||||||||||
Total | 103.2 | 109.7 | 4.25 | % | |||||||||||
Total debt securities held-to-maturity | $ | 226.9 | $ | 230.4 | 3.28 | % |
March 31, 2017 | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Less than 12 months | 12 months or greater | ||||||||||||||||||
Fair Value | Gross Unrealized Loss | Fair Value | Gross Unrealized Loss | ||||||||||||||||
Mortgage-backed securities | |||||||||||||||||||
U.S. government agency securities | $ | 63.3 | $ | (1.7 | ) | $ | 25.3 | $ | (1.4 | ) | |||||||||
State and municipal | 2.9 | – | 14.9 | (0.4 | ) | ||||||||||||||
Total securities held-to-maturity | $ | 66.2 | $ | (1.7 | ) | $ | 40.2 | $ | (1.8 | ) |
December 31, 2016 | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Less than 12 months | 12 months or greater | ||||||||||||||||||
Fair Value | Gross Unrealized Loss | Fair Value | Gross Unrealized Loss | ||||||||||||||||
Mortgage-backed securities | |||||||||||||||||||
U.S. government agency securities | $ | 68.2 | $ | (1.7 | ) | $ | 26.7 | $ | (1.6 | ) | |||||||||
State and municipal | 3.8 | (0.1 | ) | 22.4 | (0.4 | ) | |||||||||||||
Total securities held-to-maturity | $ | 72.0 | $ | (1.8 | ) | $ | 49.1 | $ | (2.0 | ) |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
CIT Group Inc. | Subsidiaries | Total | Total | ||||||||||||||||
Senior Unsecured | $ | 10,600.5 | $ | – | $ | 10,600.5 | $ | 10,599.0 | |||||||||||
Secured borrowings: | |||||||||||||||||||
Structured financings | – | 1,725.1 | 1,725.1 | 1,925.7 | |||||||||||||||
FHLB advances | – | 2,410.7 | 2,410.7 | 2,410.8 | |||||||||||||||
Total Borrowings | $ | 10,600.5 | $ | 4,135.8 | $ | 14,736.3 | $ | 14,935.5 |
Borrowings (dollars in millions) | |||||||||||||||
March 31, 2018 | December 31, 2017 | ||||||||||||||
CIT Group Inc. | Subsidiaries | Total | Total | ||||||||||||
Senior Unsecured | $ | 4,730.8 | $ | — | $ | 4,730.8 | $ | 3,737.5 | |||||||
Subordinated unsecured debt | 395.9 | — | 395.9 | — | |||||||||||
Secured borrowings: | |||||||||||||||
Structured financings | — | 1,416.1 | 1,416.1 | 1,541.4 | |||||||||||
FHLB advances | — | 3,894.5 | 3,894.5 | 3,695.5 | |||||||||||
Total Borrowings | $ | 5,126.7 | $ | 5,310.6 | $ | 10,437.3 | $ | 8,974.4 |
Maturity Date | Rate (%) | Date of Issuance | Par Value | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 2017 | 5.000 | % | May 2012 | $ | 252.8 | |||||||||
August 2017(1) | 4.250 | % | August 2012 | 1,725.8 | ||||||||||
March 2018(1) | 5.250 | % | March 2012 | 1,465.0 | ||||||||||
April 2018(1) | 6.625 | % | March 2011 | 695.0 | ||||||||||
May 2018(1) | 5.000 | % | December 2016 | 955.9 | ||||||||||
February 2019(2) | 5.500 | % | February 2012 | 1,750.0 | ||||||||||
February 2019 | 3.875 | % | February 2014 | 1,000.0 | ||||||||||
May 2020 | 5.375 | % | May 2012 | 750.0 | ||||||||||
August 2022 | 5.000 | % | August 2012 | 1,250.0 | ||||||||||
August 2023 | 5.000 | % | August 2013 | 750.0 | ||||||||||
Weighted average rate and total | 5.022 | % | $ | 10,594.5 |
On April 9, 2018, CIT redeemed $383 million aggregate principal amount of our 5.500% senior unsecured notes due February 2019 and $500 million aggregate principal amount of our 3.875% senior unsecured notes due February 2019, at an aggregate premium of $15.7 million. Refer to Note 15 — Subsequent Events for further disclosure. |
FHLB Advances with Pledged Assets(1) Summary (dollars in millions) | |||||||||||||||
March 31, 2018 | December 31, 2017 | ||||||||||||||
FHLB Advances | Pledged Assets (1) | FHLB Advances | Pledged Assets (1) | ||||||||||||
Total | $ | 3,894.5 | $ | 6,338.6 | $ | 3,695.5 | $ | 6,154.1 |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
FHLB Advances | Pledged Assets | FHLB Advances | Pledged Assets | ||||||||||||||||
Total | $ | 2,410.7 | $ | 6,230.1 | $ | 2,410.8 | $ | 6,389.7 |
Structured Financings and Pledged Assets Summary (dollars in millions) | |||||||||||||||
March 31, 2018 | December 31, 2017 | ||||||||||||||
Secured Borrowing | Pledged Assets | Secured Borrowing | Pledged Assets | ||||||||||||
Business Capital | $ | 695.5 | $ | 2,817.5 | $ | 768.8 | $ | 2,838.6 | |||||||
Rail(1) (2) | 720.6 | 1,259.9 | 772.6 | 1,272.0 | |||||||||||
Total | $ | 1,416.1 | $ | 4,077.4 | $ | 1,541.4 | $ | 4,110.6 |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Secured Borrowing | Pledged Assets | Secured Borrowing | Pledged Assets | ||||||||||||||||
Business Capital | $ | 869.9 | $ | 3,035.1 | $ | 949.8 | $ | 2,608.0 | |||||||||||
Rail(1) | 817.7 | 1,293.6 | 860.1 | 1,327.5 | |||||||||||||||
Commercial Finance | – | – | – | 0.2 | |||||||||||||||
Subtotal — Commercial Banking | 1,687.6 | 4,328.7 | 1,809.9 | 3,935.7 | |||||||||||||||
Non-Strategic Portfolios | 37.5 | 37.5 | 115.8 | 212.6 | |||||||||||||||
Total | $ | 1,725.1 | $ | 4,366.2 | $ | 1,925.7 | $ | 4,148.3 |
(1) | At March 31, |
(2) | AtMarch 31, 2018, secured borrowings and pledged assets, respectively, of $211.5 million and $379.9 million were related to the pending sale of our European Rail business, NACCO, and will be transferred to the buyer upon sale of that business. |
Unconsolidated VIEs Carrying Value (dollars in millions) | Unconsolidated VIEs Carrying Value (dollars in millions) | |||||||||||||||||||||||||||||||||
Unconsolidated VIEs Carrying Value March 31, 2017 | Unconsolidated VIEs Carrying Value December 31, 2016 | March 31, 2018 | December 31, 2017 | |||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Securities | Partnership Investment | Securities | Partnership Investment | Securities | Partnership Investment | Securities | Partnership Investment | |||||||||||||||||||||||||||
Agency securities | $ | 2,583.6 | $ | – | $ | 2,152.9 | $ | – | $ | 4,726.4 | $ | — | $ | 4,950.2 | $ | — | ||||||||||||||||||
Non agency securities — Other servicer | 739.3 | – | 769.0 | – | 244.0 | — | 318.8 | — | ||||||||||||||||||||||||||
Tax credit equity investments | – | 164.4 | ��� | 167.7 | — | 207.0 | — | 198.8 | ||||||||||||||||||||||||||
Equity investments | – | 13.1 | – | 11.4 | — | 46.7 | — | 38.6 | ||||||||||||||||||||||||||
Total Assets | $ | 3,322.9 | $ | 177.5 | $ | 2,921.9 | $ | 179.1 | $ | 4,970.4 | $ | 253.7 | $ | 5,269.0 | $ | 237.4 | ||||||||||||||||||
Commitments to tax credit investments | $ | – | $ | 53.6 | $ | – | $ | 62.3 | $ | — | $ | 79.7 | $ | — | $ | 66.6 | ||||||||||||||||||
Total Liabilities | $ | – | $ | 53.6 | $ | – | $ | 62.3 | $ | — | $ | 79.7 | $ | — | $ | 66.6 | ||||||||||||||||||
Maximum loss exposure(1) | $ | 3,322.9 | $ | 177.5 | $ | 2,921.9 | $ | 179.1 | $ | 4,970.4 | $ | 253.7 | $ | 5,269.0 | $ | 237.4 |
(1) | Maximum loss exposure to the unconsolidated VIEs excludes the liability for representations and warranties, corporate guarantees and also excludes servicing advances. |
Fair and Notional Values of Derivative Financial Instruments(1) (dollars in millions) | Fair and Notional Values of Derivative Financial Instruments(1) (dollars in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2018 | December 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Qualifying Hedges | Notional Amount | Asset Fair Value | Liability Fair Value | Notional Amount | Asset Fair Value | Liability Fair Value | Notional Amount | Asset Fair Value | Liability Fair Value | Notional Amount | Asset Fair Value | Liability Fair Value | ||||||||||||||||||||||||||||||||||||||
Foreign currency forward contracts — net investment hedges | $ | 924.6 | $ | 8.3 | $ | (0.8 | ) | $ | 817.9 | $ | 16.9 | $ | – | $ | 989.0 | $ | 23.9 | $ | (7.2 | ) | $ | 977.3 | $ | 0.2 | $ | (18.7 | ) | |||||||||||||||||||||||
Interest rate swap - fair value hedge (2) | 250.0 | 0.6 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Total Qualifying Hedges | 924.6 | 8.3 | (0.8 | ) | 817.9 | 16.9 | – | 1,239.0 | 24.5 | (7.2 | ) | 977.3 | 0.2 | (18.7 | ) | |||||||||||||||||||||||||||||||||||
Non-Qualifying Hedges | Non-Qualifying Hedges | |||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate swaps(2) | 5,862.7 | 58.8 | (32.9 | ) | 5,309.2 | 63.0 | (50.1 | ) | 7,686.3 | 82.4 | (65.6 | ) | 7,112.0 | 60.8 | (38.6 | ) | ||||||||||||||||||||||||||||||||||
Written options | 2,663.1 | – | (0.9 | ) | 2,626.5 | 0.1 | (1.0 | ) | 2,722.4 | — | (2.2 | ) | 2,744.3 | — | (0.7 | ) | ||||||||||||||||||||||||||||||||||
Purchased options | 2,332.5 | 0.9 | – | 2,129.6 | 1.0 | (0.1 | ) | 2,567.0 | 2.2 | — | 2,571.5 | 0.7 | — | |||||||||||||||||||||||||||||||||||||
Foreign currency forward contracts | 1,338.5 | 7.6 | (5.9 | ) | 1,329.8 | 30.2 | (6.0 | ) | 1,505.3 | 9.5 | (12.6 | ) | 1,375.5 | 6.9 | (14.9 | ) | ||||||||||||||||||||||||||||||||||
Total Return Swap (TRS) | 158.0 | – | (12.2 | ) | 587.5 | – | (11.3 | ) | 189.6 | — | (16.2 | ) | 182.4 | — | (14.1 | ) | ||||||||||||||||||||||||||||||||||
Equity Warrants | 1.0 | 0.1 | – | 1.0 | 0.2 | – | 0.8 | — | — | 0.8 | — | — | ||||||||||||||||||||||||||||||||||||||
Interest Rate Lock Commitments | 8.7 | 0.1 | – | 20.7 | 0.1 | (0.1 | ) | 14.6 | 0.1 | — | 7.7 | 0.1 | — | |||||||||||||||||||||||||||||||||||||
Forward Sale Commitments on Agency MBS | 20.0 | – | (0.2 | ) | 39.0 | 0.1 | – | 11.5 | — | (0.1 | ) | 8.0 | — | — | ||||||||||||||||||||||||||||||||||||
Credit derivatives | 266.6 | – | (0.1 | ) | 267.6 | – | (0.2 | ) | 306.3 | — | — | 285.1 | — | — | ||||||||||||||||||||||||||||||||||||
Total Non-qualifying Hedges | 12,651.1 | 67.5 | (52.2 | ) | 12,310.9 | 94.7 | (68.8 | ) | 15,003.8 | 94.2 | (96.7 | ) | 14,287.3 | 68.5 | (68.3 | ) | ||||||||||||||||||||||||||||||||||
Total Hedges | $ | 13,575.7 | $ | 75.8 | $ | (53.0 | ) | $ | 13,128.8 | $ | 111.6 | $ | (68.8 | ) | ||||||||||||||||||||||||||||||||||||
Total Derivatives | $ | 16,242.8 | $ | 118.7 | $ | (103.9 | ) | $ | 15,264.6 | $ | 68.7 | $ | (87.0 | ) |
(1) | Presented on a gross basis. |
(2) | Fair value balances include accrued interest. |
Gross Amounts not offset in the Consolidated Balance Sheet | |||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Gross Amount of Recognized Assets (Liabilities) | Gross Amount Offset in the Consolidated Balance Sheet | Net Amount Presented in the Consolidated Balance Sheet | Derivative Financial Instruments(2) | Cash Collateral Pledged/ (Received)(2),(3) | Net Amount | ||||||||||||||||||||||||||||||||||||||||||||
March 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
Offsetting of Derivative Assets and Liabilities (dollars in millions)(1) | Offsetting of Derivative Assets and Liabilities (dollars in millions)(1) | ||||||||||||||||||||||||||||||||||||||||||||||||
Gross Amounts not offset in the Consolidated Balance Sheet | |||||||||||||||||||||||||||||||||||||||||||||||||
Gross Amount of Recognized Assets (Liabilities) | Gross Amount Offset in the Consolidated Balance Sheet | Net Amount Presented in the Consolidated Balance Sheet | Derivative Financial Instruments(2) | Cash Collateral Pledged / (Received)(2)(3) | Net Amount | ||||||||||||||||||||||||||||||||||||||||||||
March 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||
Derivative assets | $ | 75.8 | $ | – | $ | 75.8 | $ | (14.3 | ) | $ | (14.5 | ) | $ | 47.0 | $ | 118.7 | $ | — | $ | 118.7 | $ | (24.8 | ) | $ | (33.2 | ) | $ | 60.7 | |||||||||||||||||||||
Derivative liabilities | (53.0 | ) | – | (53.0 | ) | 14.3 | 2.9 | (35.8 | ) | (103.9 | ) | — | (103.9 | ) | 24.8 | 1.9 | (77.2 | ) | |||||||||||||||||||||||||||||||
December 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
Derivative assets | $ | 111.6 | $ | – | $ | 111.6 | $ | (30.9 | ) | $ | (48.7 | ) | $ | 32.0 | $ | 68.7 | $ | — | $ | 68.7 | $ | (18.7 | ) | $ | (8.4 | ) | $ | 41.6 | |||||||||||||||||||||
Derivative liabilities | (68.8 | ) | – | (68.8 | ) | 30.9 | 5.0 | (32.9 | ) | (87.0 | ) | — | (87.0 | ) | 18.7 | 23.0 | (45.3 | ) |
(1) | Due to a change in clearinghouse rules, the Company accounts for swap contracts cleared by the Chicago Mercantile Exchange (“CME”) as “settled-to-market” effective January 2017. As a result, variation margin payments are characterized as settlement of the derivative exposure and variation margin balances are netted against the corresponding derivative mark-to-market balances. The Company’s swap contracts cleared by LCH Clearnet (“LCH”) continue to be accounted for as “collateralized-to-market” and variation margin balances are characterized as collateral against derivative exposures. At March 31, |
(2) | The Company’s derivative transactions are governed by ISDA agreements that allow for net settlements of certain payments as well as offsetting of all contracts (“Derivative Financial Instruments”) with a given counterparty in the event of bankruptcy or default of one of the two parties to the transaction. We believe our ISDA agreements meet the definition of a master netting arrangement or similar agreement for purposes of the above disclosure. In conjunction with the ISDA agreements, the Company has entered into collateral arrangements with its counterparties which provide for the exchange of cash depending on change in the market valuation of the derivative contracts outstanding. Such collateral is available to be applied in settlement of the net balances upon an event of default of one of the counterparties. |
(3) | Collateral pledged or received is included in Other assets or Other liabilities, respectively. |
GROUP INC. AND SUBSIDIARIESGroup Inc. and Subsidiaries – NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNotes to Condensed Consolidated Financial Statements (Unaudited)Derivative Instruments March 31, 2018 Amounts Recognized Derivative Hedged Item Hedge Ineffectiveness Hedges of interest rate risk on borrowings using interest rate swaps Interest Expense $ 0.5 $ (0.5 ) $ — derivativesnon-qualifying hedges on the statements of income.income
Quarters Ended March 31, | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Derivative Instruments | Gain / (Loss) Recognized | 2017 | 2016 | |||||||||||
Non Qualifying Hedges | ||||||||||||||
Interest rate swaps | Other income | $ | 2.2 | $ | (2.6 | ) | ||||||||
Interest rate options | Other income | 0.1 | 0.4 | |||||||||||
Foreign currency forward contracts | Other income | (7.0 | ) | (33.9 | ) | |||||||||
Equity warrants | Other income | (0.1 | ) | (0.3 | ) | |||||||||
Total Return Swap (TRS) | Other income | (0.9 | ) | 18.2 | ||||||||||
Interest Rate Lock Commitments | Other income | 0.1 | – | |||||||||||
Forward Sale Commitments on Agency MBS | Other income | (0.1 | ) | – | ||||||||||
Credit Derivatives | Other income | – | 0.9 | |||||||||||
Total Non-qualifying Hedges | $ | (5.7 | ) | $ | (17.3 | ) | ||||||||
Total derivatives-income statement impact | $ | (5.7 | ) | $ | (17.3 | ) |
Derivative Instrument Gains and Losses (dollars in millions) | |||||||||
Quarters Ended March 31, | |||||||||
Derivative Instruments | Gain / (Loss) Recognized | 2018 | 2017 | ||||||
Non Qualifying Hedges | |||||||||
Interest rate swaps | Other income | $ | 4.0 | $ | 2.2 | ||||
Interest rate options | Other income | 0.1 | 0.1 | ||||||
Foreign currency forward contracts | Other income | (29.9 | ) | (7.0 | ) | ||||
Equity warrants | Other income | — | (0.1 | ) | |||||
Total Return Swap (TRS) | Other income | (2.1 | ) | (0.9 | ) | ||||
Interest Rate Lock Commitments | Other income | — | 0.1 | ||||||
Forward Sale Commitments on Agency MBS | Other income | 0.2 | (0.1 | ) | |||||
Credit Derivatives | Other income | (0.2 | ) | — | |||||
Total Non-qualifying Hedges -income statement impact | $ | (27.9 | ) | $ | (5.7 | ) | |||
Changes in AOCI Relating to Derivatives (dollars in millions) | |||||||||||||||
Contract Type | Derivatives - effective portion reclassified from AOCI to income | Total income statement impact | Derivatives - effective portion recorded in OCI | Total change in OCI for period | |||||||||||
Quarter Ended March 31, 2018 | |||||||||||||||
Foreign currency forward contracts — net investment hedges | $ | — | $ | — | $ | 7.2 | $ | 7.2 | |||||||
Total | $ | — | $ | — | $ | 7.2 | $ | 7.2 | |||||||
Quarter Ended March 31, 2017 | |||||||||||||||
Foreign currency forward contracts — net investment hedges | $ | 6.9 | $ | 6.9 | $ | (8.9 | ) | $ | (15.8 | ) | |||||
Total | $ | 6.9 | $ | 6.9 | $ | (8.9 | ) | $ | (15.8 | ) |
Contract Type | Derivatives - effective portion reclassified from AOCI to income | Hedge ineffectiveness recorded directly in income | Total income statement impact | Derivatives - effective portion recorded in OCI | Total change in OCI for period | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Quarter Ended March 31, 2017 | ||||||||||||||||||||||
Foreign currency forward contracts — net investment hedges | $ | 6.9 | $ | – | $ | 6.9 | $ | (8.9 | ) | $ | (15.8 | ) | ||||||||||
Total | $ | 6.9 | $ | – | $ | 6.9 | $ | (8.9 | ) | $ | (15.8 | ) | ||||||||||
Quarter Ended March 31, 2016 | ||||||||||||||||||||||
Foreign currency forward contracts — net investment hedges | $ | 1.8 | $ | – | $ | 1.8 | $ | (38.0 | ) | $ | (39.8 | ) | ||||||||||
Total | $ | 1.8 | $ | – | $ | 1.8 | $ | (38.0 | ) | $ | (39.8 | ) |
basis.
Assets and Liabilities Measured at Fair Value on a Recurring Basis (dollars in millions) | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
March 31, 2018 | |||||||||||||||
Assets | |||||||||||||||
Debt securities AFS | $ | 5,564.1 | $ | 247.8 | $ | 5,005.0 | $ | 311.3 | |||||||
Securities carried at fair value with changes recorded in net income(1) | 44.1 | 0.2 | 43.9 | — | |||||||||||
Derivative assets at fair value — non-qualifying hedges(2) | 94.2 | — | 94.1 | 0.1 | |||||||||||
Derivative assets at fair value — qualifying hedges(2) | 24.5 | — | 24.5 | — | |||||||||||
Total | $ | 5,726.9 | $ | 248.0 | $ | 5,167.5 | $ | 311.4 | |||||||
Liabilities | |||||||||||||||
Derivative liabilities at fair value — non-qualifying hedges(2) | $ | (96.7 | ) | $ | — | $ | (80.5 | ) | $ | (16.2 | ) | ||||
Derivative liabilities at fair value — qualifying hedges(2) | (7.2 | ) | — | (7.2 | ) | — | |||||||||
Consideration holdback liability | (46.0 | ) | — | — | (46.0 | ) | |||||||||
FDIC True-up liability | (65.5 | ) | — | — | (65.5 | ) | |||||||||
Total | $ | (215.4 | ) | $ | — | $ | (87.7 | ) | $ | (127.7 | ) | ||||
December 31, 2017 | |||||||||||||||
Assets | |||||||||||||||
Debt securities AFS | $ | 6,123.6 | $ | 199.0 | $ | 5,538.8 | $ | 385.8 | |||||||
Securities carried at fair value with changes recorded in net income | 0.4 | — | — | 0.4 | |||||||||||
Equity securities AFS | 44.7 | 0.2 | 44.5 | — | |||||||||||
Derivative assets at fair value — non-qualifying hedges(2) | 68.5 | — | 68.4 | 0.1 | |||||||||||
Derivative assets at fair value — qualifying hedges | 0.2 | — | 0.2 | — | |||||||||||
Total | $ | 6,237.4 | $ | 199.2 | $ | 5,651.9 | $ | 386.3 | |||||||
Liabilities | |||||||||||||||
Derivative liabilities at fair value — non-qualifying hedges(2) | $ | (68.3 | ) | $ | — | $ | (54.2 | ) | $ | (14.1 | ) | ||||
Derivative liabilities at fair value — qualifying hedges | (18.7 | ) | — | (18.7 | ) | — | |||||||||
Consideration holdback liability | (46.0 | ) | — | — | (46.0 | ) | |||||||||
FDIC True-up liability | (65.1 | ) | — | — | (65.1 | ) | |||||||||
Total | $ | (198.1 | ) | $ | — | $ | (72.9 | ) | $ | (125.2 | ) |
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2017 | ||||||||||||||||||
Assets | ||||||||||||||||||
Debt Securities AFS | $ | 3,696.8 | $ | – | $ | 3,226.3 | $ | 470.5 | ||||||||||
Securities carried at fair value with changes recorded in net income | 268.9 | – | – | 268.9 | ||||||||||||||
Equity Securities AFS | 34.2 | 0.2 | 34.0 | – | ||||||||||||||
Derivative assets at fair value — non-qualifying hedges(1) | 67.5 | – | 67.4 | 0.1 | ||||||||||||||
Derivative assets at fair value — qualifying hedges | 8.3 | – | 8.3 | – | ||||||||||||||
Total | $ | 4,075.7 | $ | 0.2 | $ | 3,336.0 | $ | 739.5 | ||||||||||
Liabilities | ||||||||||||||||||
Derivative liabilities at fair value — non-qualifying hedges(1) | $ | (52.2 | ) | $ | – | $ | (39.9 | ) | $ | (12.3 | ) | |||||||
Derivative liabilities at fair value — qualifying hedges | (0.8 | ) | – | (0.8 | ) | – | ||||||||||||
Consideration holdback liability | (47.4 | ) | – | – | (47.4 | ) | ||||||||||||
FDIC True-up Liability | (63.0 | ) | – | – | (63.0 | ) | ||||||||||||
Total | $ | (163.4 | ) | $ | – | $ | (40.7 | ) | $ | (122.7 | ) | |||||||
December 31, 2016 | ||||||||||||||||||
Assets | ||||||||||||||||||
Debt Securities AFS | $ | 3,674.1 | $ | 200.1 | $ | 2,988.5 | $ | 485.5 | ||||||||||
Securities carried at fair value with changes recorded in net income | 283.5 | – | – | 283.5 | ||||||||||||||
Equity Securities AFS(2) | 34.1 | 0.3 | 33.8 | – | ||||||||||||||
Derivative assets at fair value — non-qualifying hedges(1) | 94.7 | – | 94.7 | – | ||||||||||||||
Derivative assets at fair value — qualifying hedges | 16.9 | – | 16.9 | – | ||||||||||||||
Total | $ | 4,103.3 | $ | 200.4 | $ | 3,133.9 | $ | 769.0 | ||||||||||
Liabilities | ||||||||||||||||||
Derivative liabilities at fair value — non-qualifying hedges(1) | $ | (68.8 | ) | $ | – | $ | (57.3 | ) | $ | (11.5 | ) | |||||||
Consideration holdback liability | (47.2 | ) | – | – | (47.2 | ) | ||||||||||||
FDIC True-up Liability | (61.9 | ) | – | – | (61.9 | ) | ||||||||||||
Total | $ | (177.9 | ) | $ | – | $ | (57.3 | ) | $ | (120.6 | ) |
(1) | Upon the adoption of ASU 2016-01 - Financial Instruments as of January 1, 2018, equity securities AFS were reclassified to securities carried at fair value with changes recorded in net income. See Note 1 - Business and Summary of Significant Accounting Policies. |
(2) | Derivative fair values include accrued |
2017.
Quantitative Information about Level 3 Fair Value Measurements — Recurring (dollars in millions) | Quantitative Information about Level 3 Fair Value Measurements — Recurring (dollars in millions) | ||||||||||||||||||||||||||||||||
Financial Instrument | Estimated Fair Value | Valuation Technique(s) | Significant Unobservable Inputs | Range of Inputs | Weighted Average | Estimated Fair Value | Valuation Technique(s) | Significant Unobservable Inputs | Range of Inputs | Weighted Average | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2017 | |||||||||||||||||||||||||||||||||
March 31, 2018 | |||||||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||||
Securities — AFS | $ | 311.3 | Discounted cash flow | Discount Rate | 0.0% - 11.6% | 4.7% | |||||||||||||||||||||||||||
Prepayment Rate | 3.8% - 26.7% | 8.5% | |||||||||||||||||||||||||||||||
Default Rate | 0.0% - 6.6% | 3.9% | |||||||||||||||||||||||||||||||
Loss Severity | 0.3% - 76.2% | 35.5% | |||||||||||||||||||||||||||||||
Derivative assets — non qualifying | 0.1 | Internal valuation model | Borrower Rate | 3.5% - 4.9% | 4.2% | ||||||||||||||||||||||||||||
Total Assets | $ | 311.4 | |||||||||||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||||
FDIC True-up liability | $ | (65.5 | ) | Discounted cash flow | Discount Rate | 3.5% | 3.5% | ||||||||||||||||||||||||||
Consideration holdback liability | (46.0 | ) | Discounted cash flow | Payment Probability | 0% - 100% | 48.0% | |||||||||||||||||||||||||||
Derivative liabilities — non-qualifying | (16.2 | ) | Market Comparables(1) | ||||||||||||||||||||||||||||||
Total Liabilities | $ | (127.7 | ) | ||||||||||||||||||||||||||||||
December 31, 2017 | |||||||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||||
Securities — AFS | $ | 470.5 | Discounted cash flow | Discount Rate | 0.0% – 55.4% | 5.2% | $ | 385.8 | Discounted cash flow | Discount Rate | 0.0% – 37.1% | 4.6% | |||||||||||||||||||||
Prepayment Rate | 3.5% – 22.2% | 9.1% | Prepayment Rate | 2.1% – 22.3% | 8.8% | ||||||||||||||||||||||||||||
Default Rate | 0.0% – 9.9% | 3.9% | Default Rate | 0.0% – 7.3% | 3.7% | ||||||||||||||||||||||||||||
Loss Severity | 0.7% – 84.7% | 37.7% | Loss Severity | 0.3% – 72.4% | 35.3% | ||||||||||||||||||||||||||||
Securities carried at fair value with changes recorded in net income | 268.9 | Discounted cash flow | Discount Rate | 2.5% – 42.7% | 5.4% | 0.4 | Discounted cash flow | Discount Rate | 31.1% | 31.1% | |||||||||||||||||||||||
Prepayment Rate | 6.0% – 22.8% | 12.0% | Prepayment Rate | 10.9% | 10.9% | ||||||||||||||||||||||||||||
Default Rate | 1.5% – 8.5% | 4.4% | Default Rate | 2.4% | 2.4% | ||||||||||||||||||||||||||||
Loss Severity | 21.4% – 39.5% | 26.2% | Loss Severity | 59.2% | 59.2% | ||||||||||||||||||||||||||||
Derivative assets — non qualifying | 0.1 | Internal valuation model | Borrower Rate | 3.1% – 5.0% | 3.9% | 0.1 | Internal valuation model | Borrower Rate | 3.0% - 4.4% | 3.8% | |||||||||||||||||||||||
Total Assets | $ | 739.5 | $ | 386.3 | |||||||||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||||
FDIC True-up liability | $ | (63.0 | ) | Discounted cash flow | Discount Rate | 2.9% | 2.9% | $ | (65.1 | ) | Discounted cash flow | Discount Rate | 2.9% | 2.9% | |||||||||||||||||||
Consideration holdback liability | (47.4 | ) | Discounted cash flow | Payment Probability | 28.0% – 100% | 40.9% | (46.0 | ) | Discounted cash flow | Payment Probability | 0% – 100% | 48.0% | |||||||||||||||||||||
Discount Rate | 1.2% – 4.2% | 2.1% | |||||||||||||||||||||||||||||||
Derivative liabilities — non-qualifying | (12.3 | ) | Market Comparables(1) | (14.1 | ) | Market Comparables(1) | |||||||||||||||||||||||||||
Total Liabilities | $ | (122.7 | ) | $ | (125.2 | ) | |||||||||||||||||||||||||||
December 31, 2016 | |||||||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||||
Securities — AFS | $ | 485.5 | Discounted cash flow | Discount Rate | 0.0% – 96.4% | 5.5% | |||||||||||||||||||||||||||
Prepayment Rate | 3.2% – 21.2% | 8.8% | |||||||||||||||||||||||||||||||
Default Rate | 0.0% – 9.0% | 3.9% | |||||||||||||||||||||||||||||||
Loss Severity | 1.0% – 79.8% | 36.3% | |||||||||||||||||||||||||||||||
Securities carried at fair value with changes recorded in net income | 283.5 | Discounted cash flow | Discount Rate | 0.0% – 34.6% | 5.6% | ||||||||||||||||||||||||||||
Prepayment Rate | 6.1% – 16.2% | 11.9% | |||||||||||||||||||||||||||||||
Default Rate | 1.9% – 8.1% | 4.6% | |||||||||||||||||||||||||||||||
Loss Severity | 22.2% – 44.7% | 25.8% | |||||||||||||||||||||||||||||||
Total Assets | $ | 769.0 | |||||||||||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||||
FDIC True-up liability | $ | (61.9 | ) | Discounted cash flow | Discount Rate | 3.2% | 3.2% | ||||||||||||||||||||||||||
Consideration holdback liability | (47.2 | ) | Discounted cash flow | Payment Probability | 0% – 100% | 40.9% | |||||||||||||||||||||||||||
Discount Rate | 1.3% – 4.0% | 2.1% | |||||||||||||||||||||||||||||||
Derivative liabilities — non-qualifying | (11.5 | ) | Market Comparables(1) | ||||||||||||||||||||||||||||||
Total Liabilities | $ | (120.6 | ) |
(1) | The valuation of these derivatives is primarily related to the GSI facilities |
▪ | Discounted cash flow — Discounted cash flow valuation techniques generally consist of developing an estimate of future cash flows that are expected to occur over the life of an instrument and then discounting those cash flows at a rate of return that results in the estimated fair value amount. The Company utilizes both the direct and indirect valuation methods. Under the direct method, contractual cash flows are adjusted for expected losses. The adjusted cash flows are discounted at a rate which considers other costs and risks, such as market risk and liquidity. Under the indirect method, contractual cash flows are discounted at a rate which reflects the costs and risks associated with the likelihood of generating the contractual cash flows. |
▪ | Market comparables — Market comparable(s) pricing valuation techniques are used to determine the estimated fair value of certain instruments by incorporating known inputs such as recent transaction prices, pending transactions, or prices of other similar investments which require significant adjustment to reflect differences in instrument characteristics. |
▪ | Internal valuation model — The internal model for rate lock valuation uses the spread on borrower mortgage rate and the Fannie Mae pass through rate and applies a conversion factor to assess the derivative value. |
▪ | Default rate — is an estimate of the likelihood of not collecting contractual amounts owed expressed as a constant default rate. |
▪ | Discount rate — is a rate of return used to present value the future expected cash flows to arrive at the estimated fair value of an instrument. The discount rate consists of a benchmark rate component and a risk premium component. The benchmark rate component, for example, LIBOR or U.S. Treasury rates, is generally observable within the market and is necessary to appropriately reflect the time value of money. The risk premium component reflects the amount of compensation market participants require due to the uncertainty inherent in the instruments’ cash flows resulting from risks such as credit and liquidity. |
▪ | Loss severity — is the percentage of contractual cash flows lost in the event of a default. |
▪ | Prepayment rate — is the estimated rate at which forecasted prepayments of principal of the related loan or debt instrument are expected to occur, expressed as a constant prepayment rate (“CPR”). |
▪ | Payment Probability — is an estimate of the likelihood the consideration holdback amount will be required to be paid expressed as a percentage. |
▪ | Borrower rate — Mortgage rate committed to the borrower by CIT |
GROUP INC. AND SUBSIDIARIESGroup Inc. and Subsidiaries – NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNotes to Condensed Consolidated Financial Statements (Unaudited)
Securities- AFS | Securities carried at fair value with changes recorded in net income | FDIC Receivable | Derivative assets- non- qualifying(1) | Derivative liabilities- non- qualifying(2) | FDIC True-up Liability | Consideration holdback Liability | |||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Securities- AFS | Securities Carried at Fair Value with Changes Recorded in Net Income | Derivative Assets- Non- qualifying(1) | Derivative Liabilities- Non- qualifying(2) | FDIC True-up Liability | Consideration Holdback Liability | ||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2017 | $ | 385.8 | $ | 0.4 | $ | 0.1 | $ | (14.1 | ) | $ | (65.1 | ) | $ | (46.0 | ) | ||||||||||||||||||||||||||||||||||||||
Included in earnings | 3.5 | — | — | (2.1 | ) | (0.4 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||
Included in comprehensive income | (2.7 | ) | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Sales, paydowns, and adjustments | (75.3 | ) | (0.4 | ) | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2018 | $ | 311.3 | $ | — | $ | 0.1 | $ | (16.2 | ) | $ | (65.5 | ) | $ | (46.0 | ) | ||||||||||||||||||||||||||||||||||||||
December 31, 2016 | $ | 485.5 | $ | 283.5 | $ | 0.6 | $ | – | $ | (11.5 | ) | $ | (61.9 | ) | $ | (47.2 | ) | $ | 485.5 | $ | 283.5 | $ | — | $ | (11.5 | ) | $ | (61.9 | ) | $ | (47.2 | ) | |||||||||||||||||||||
Included in earnings | (1.7 | ) | 3.2 | 0.8 | 0.1 | (0.8 | ) | (1.1 | ) | (0.2 | ) | (1.7 | ) | 3.2 | 0.1 | (0.8 | ) | (1.1 | ) | (0.2 | ) | ||||||||||||||||||||||||||||||||
Included in comprehensive income | 6.9 | – | – | – | – | – | – | 6.9 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Impairment | (0.1 | ) | – | – | – | – | – | – | (0.1 | ) | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Settlements | (20.1 | ) | (17.8 | ) | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||||||||||
Sales, paydowns, and adjustments | (20.1 | ) | (17.8 | ) | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2017 | $ | 470.5 | $ | 268.9 | $ | 1.4 | $ | 0.1 | $ | (12.3 | ) | $ | (63.0 | ) | $ | (47.4 | ) | $ | 470.5 | $ | 268.9 | $ | 0.1 | $ | (12.3 | ) | $ | (63.0 | ) | $ | (47.4 | ) | |||||||||||||||||||||
December 31, 2015 | $ | 567.1 | $ | 339.7 | $ | 54.8 | $ | – | $ | (55.5 | ) | $ | (56.9 | ) | $ | (60.8 | ) | ||||||||||||||||||||||||||||||||||||
Included in earnings | (1.5 | ) | (1.0 | ) | 2.8 | 0.2 | 18.5 | (1.1 | ) | (0.6 | ) | ||||||||||||||||||||||||||||||||||||||||||
Included in comprehensive income | (2.1 | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||||||||||||
Impairment | (2.0 | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||||||||||||
Settlements | (20.9 | ) | (15.7 | ) | (3.2 | ) | – | – | – | – | |||||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2016 | $ | 540.6 | $ | 323.0 | $ | 54.4 | $ | 0.2 | $ | (37.0 | ) | $ | (58.0 | ) | $ | (61.4 | ) |
(1) | Valuation of Interest Rate Lock Commitments |
(2) | Valuation of the derivatives related to the TRS Transactions and written options on certain CIT Bank CDs. |
Fair Value Level at Reporting Date | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total Carrying Value | Level 1 | Level 2 | Level 3 | Total (Losses) | ||||||||||||||||||
Assets | ||||||||||||||||||||||
March 31, 2017 | ||||||||||||||||||||||
Assets held for sale | $ | 162.5 | $ | – | $ | – | $ | 162.5 | $ | (1.7 | ) | |||||||||||
Other real estate owned | 13.6 | – | – | 13.6 | (0.7 | ) | ||||||||||||||||
Impaired loans | 65.1 | – | – | 65.1 | (20.7 | ) | ||||||||||||||||
Total | $ | 241.2 | $ | – | $ | – | $ | 241.2 | $ | (23.1 | ) | |||||||||||
December 31, 2016 | ||||||||||||||||||||||
Goodwill | $ | 51.8 | $ | – | $ | – | $ | 51.8 | $ | (354.2 | ) | |||||||||||
Assets held for sale | 201.6 | – | – | 201.6 | (14.7 | ) | ||||||||||||||||
Other real estate owned | 22.5 | – | – | 22.5 | (3.2 | ) | ||||||||||||||||
Impaired loans | 151.9 | – | – | 151.9 | (26.8 | ) | ||||||||||||||||
Total | $ | 427.8 | $ | – | $ | – | $ | 427.8 | $ | (398.9 | ) |
Fair Value Measurements at Reporting Date Using: | |||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | Total (Losses) | |||||||||||||||
March 31, 2018 | |||||||||||||||||||
Assets held for sale | $ | 153.6 | $ | — | $ | 2.5 | $ | 151.1 | $ | (0.4 | ) | ||||||||
Other real estate owned | 13.2 | — | — | 13.2 | (0.5 | ) | |||||||||||||
Impaired loans(1) | 37.6 | — | — | 37.6 | (35.3 | ) | |||||||||||||
Total | $ | 204.4 | $ | — | $ | 2.5 | $ | 201.9 | $ | (36.2 | ) | ||||||||
December 31, 2017 | |||||||||||||||||||
Assets held for sale | 177.8 | — | — | 177.8 | (15.0 | ) | |||||||||||||
Other real estate owned | 18.8 | — | — | 18.8 | (4.4 | ) | |||||||||||||
Impaired loans | 89.1 | — | — | 89.1 | (21.9 | ) | |||||||||||||
Total | $ | 285.7 | $ | — | $ | — | $ | 285.7 | $ | (41.3 | ) |
(1) | In the current quarter there was a $22 million charge-off of a single Commercial Finance exposure. |
GROUP INC. AND SUBSIDIARIESGroup Inc. and Subsidiaries – NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNotes to Condensed Consolidated Financial Statements (Unaudited)
Estimated Fair Value | |||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Carrying Value | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||
March 31, 2017 | |||||||||||||||||||||||||||||||||||||||||
Estimated Fair Value | |||||||||||||||||||||||||||||||||||||||||
Carrying Value | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||
March 31, 2018 | |||||||||||||||||||||||||||||||||||||||||
Financial Assets | |||||||||||||||||||||||||||||||||||||||||
Cash and interest bearing deposits | $ | 6,156.9 | $ | 6,156.9 | $ | – | $ | – | $ | 6,156.9 | $ | 4,096.3 | $ | 4,096.3 | $ | — | $ | — | $ | 4,096.3 | |||||||||||||||||||||
Derivative assets at fair value — non-qualifying hedges | 67.5 | – | 67.4 | 0.1 | 67.5 | 94.2 | — | 94.1 | 0.1 | 94.2 | |||||||||||||||||||||||||||||||
Derivative assets at fair value — qualifying hedges | 8.3 | – | 8.3 | – | 8.3 | 24.5 | — | 24.5 | — | 24.5 | |||||||||||||||||||||||||||||||
Assets held for sale (excluding leases) | 396.1 | – | 118.2 | 291.1 | 409.3 | 980.2 | — | 3.6 | 1,011.5 | 1,015.1 | |||||||||||||||||||||||||||||||
Loans (excluding leases) | 26,873.9 | – | 346.6 | 26,678.1 | 27,024.7 | 26,828.4 | 668.8 | 26,495.2 | 27,164.0 | ||||||||||||||||||||||||||||||||
Securities purchased under agreement to resell | 250.0 | — | 250.0 | — | 250.0 | ||||||||||||||||||||||||||||||||||||
Investment securities(1) | 4,476.3 | 0.2 | 3,421.3 | 1,058.3 | 4,479.8 | 5,910.5 | 248.0 | 5,048.9 | 613.6 | 5,910.5 | |||||||||||||||||||||||||||||||
Indemnification assets(2) | 206.7 | – | – | 169.2 | 169.2 | 91.6 | — | — | 72.2 | 72.2 | |||||||||||||||||||||||||||||||
Other assets subject to fair value disclosure and unsecured counterparty receivables(3) | 516.9 | – | – | 516.9 | 516.9 | 476.2 | — | — | 476.2 | 476.2 | |||||||||||||||||||||||||||||||
Financial Liabilities | |||||||||||||||||||||||||||||||||||||||||
Deposits(4) | (32,360.9 | ) | – | – | (32,500.1 | ) | (32,500.1 | ) | (30,616.7 | ) | — | — | (30,638.8 | ) | (30,638.8 | ) | |||||||||||||||||||||||||
Derivative liabilities at fair value — non-qualifying hedges | (52.2 | ) | – | (39.9 | ) | (12.3 | ) | (52.2 | ) | (96.7 | ) | — | (80.5 | ) | (16.2 | ) | (96.7 | ) | |||||||||||||||||||||||
Derivative liabilities at fair value — qualifying hedges | (0.8 | ) | – | (0.8 | ) | – | (0.8 | ) | (7.2 | ) | — | (7.2 | ) | — | (7.2 | ) | |||||||||||||||||||||||||
Borrowings(4) | (14,841.5 | ) | – | (14,231.1 | ) | (1,050.2 | ) | (15,281.3 | ) | (10,480.9 | ) | — | (9,711.9 | ) | (943.1 | ) | (10,655.0 | ) | |||||||||||||||||||||||
Credit balances of factoring clients | (1,547.1 | ) | – | – | (1,547.1 | ) | (1,547.1 | ) | (1,549.0 | ) | — | — | (1,549.0 | ) | (1,549.0 | ) | |||||||||||||||||||||||||
Other liabilities subject to fair value disclosure(5) | (736.9 | ) | – | – | (736.9 | ) | (736.9 | ) | (613.7 | ) | — | — | (613.7 | ) | (613.7 | ) | |||||||||||||||||||||||||
December 31, 2016 | |||||||||||||||||||||||||||||||||||||||||
December 31, 2017 | |||||||||||||||||||||||||||||||||||||||||
Financial Assets | |||||||||||||||||||||||||||||||||||||||||
Cash and interest bearing deposits | $ | 6,430.6 | $ | 6,430.6 | $ | – | $ | – | $ | 6,430.6 | $ | 1,718.7 | $ | 1,718.7 | $ | — | $ | — | $ | 1,718.7 | |||||||||||||||||||||
Derivative assets at fair value — non-qualifying hedges | 94.7 | – | 94.7 | – | 94.7 | 68.5 | — | 68.4 | 0.1 | 68.5 | |||||||||||||||||||||||||||||||
Derivative assets at fair value — qualifying hedges | 16.9 | – | 16.9 | – | 16.9 | 0.2 | — | 0.2 | — | 0.2 | |||||||||||||||||||||||||||||||
Assets held for sale (excluding leases) | 428.4 | – | 175.0 | 264.6 | 439.6 | 1,011.4 | — | 4.7 | 1,044.8 | 1,049.5 | |||||||||||||||||||||||||||||||
Loans (excluding leases) | 26,683.0 | – | 390.3 | 26,456.4 | 26,846.7 | 26,428.1 | — | 624.3 | 26,220.5 | 26,844.8 | |||||||||||||||||||||||||||||||
Securities purchased under agreement to resell | 150.0 | — | 150.0 | — | 150.0 | ||||||||||||||||||||||||||||||||||||
Investment securities(1) | 4,491.1 | 200.4 | 3,199.6 | 1,094.2 | 4,494.2 | 6,469.9 | 199.2 | 5,583.3 | 687.4 | 6,469.9 | |||||||||||||||||||||||||||||||
Indemnification assets(2) | 233.4 | – | – | 201.0 | 201.0 | 113.5 | — | — | 87.4 | 87.4 | |||||||||||||||||||||||||||||||
Other assets subject to fair value disclosure and unsecured counterparty receivables(3) | 712.2 | – | – | 712.2 | 712.2 | 542.2 | — | — | 542.2 | 542.2 | |||||||||||||||||||||||||||||||
Financial Liabilities | |||||||||||||||||||||||||||||||||||||||||
Deposits(4) | (32,323.2 | ) | – | – | (32,490.9 | ) | (32,490.9 | ) | (29,586.5 | ) | — | — | (29,668.6 | ) | (29,668.6 | ) | |||||||||||||||||||||||||
Derivative liabilities at fair value — non-qualifying hedges | (68.8 | ) | – | (57.3 | ) | (11.5 | ) | (68.8 | ) | (68.3 | ) | — | (54.2 | ) | (14.1 | ) | (68.3 | ) | |||||||||||||||||||||||
Derivative liabilities at fair value — qualifying hedges | (18.7 | ) | — | (18.7 | ) | — | (18.7 | ) | |||||||||||||||||||||||||||||||||
Borrowings(4) | (15,097.8 | ) | – | (14,457.8 | ) | (1,104.9 | ) | (15,562.7 | ) | (9,043.8 | ) | — | (8,281.7 | ) | (991.2 | ) | (9,272.9 | ) | |||||||||||||||||||||||
Credit balances of factoring clients | (1,292.0 | ) | – | – | (1,292.0 | ) | (1,292.0 | ) | (1,468.6 | ) | — | — | (1,468.6 | ) | (1,468.6 | ) | |||||||||||||||||||||||||
Other liabilities subject to fair value disclosure(5) | (1,003.6 | ) | – | – | (1,003.6 | ) | (1,003.6 | ) | (725.2 | ) | — | — | (725.2 | ) | (725.2 | ) |
(1) | Level 3 estimated fair value at March 31, |
(2) | The indemnification assets included in the above table do not include Agency claims indemnification ($ |
(3) | Other assets subject to fair value disclosure primarily include accrued interest receivable and miscellaneous receivables. These assets have carrying values that approximate fair value generally due to |
(4) | Deposits and borrowings include accrued interest, which is included in “Other liabilities” in the Balance Sheet. |
(5) | Other liabilities subject to fair value disclosure include accounts payable, accrued liabilities, customer security and maintenance deposits and miscellaneous liabilities. The fair value of these approximate carrying value and are classified as level 3. |
▪ | Commercial and Consumer Loans — Of the loan balance above, |
▪ | Impaired Loans — The value of impaired loans is estimated using the fair value of collateral (on an orderly liquidation basis) if the loan is collateralized, the present value of expected cash flows utilizing the current market rate for such loan, or observable market price. As these Level 3 unobservable inputs are specific to individual loans/collateral types, management does not believe that sensitivity analysis of individual inputs is meaningful, but rather that sensitivity is more meaningfully assessed through the evaluation of aggregate carrying values of impaired loans relative to contractual amounts owed (unpaid principal balance or “UPB”) from customers. As of March 31, |
▪ | PCI loans — These loans are valued by grouping the loans into performing and non-performing groups and stratifying the loans based on common risk characteristics such as product type, FICO score and other economic attributes. Due to a lack of observable market data, the estimated fair value of these loan portfolios was based on an internal model using unobservable inputs, including discount rates, prepayment rates, delinquency roll-rates, and loss severities. Due to the significance of the unobservable inputs, these instruments are classified as Level 3. |
▪ | Unsecured debt — Unsecured debt includes both senior debt and subordinated debt. Approximately |
▪ | Secured borrowings — Secured borrowings |
Number of Shares of Common Stock | |||||||||
Issued | Less Treasury | Outstanding | |||||||
Common Stock – December 31, 2017 | 207,628,491 | (76,275,567 | ) | 131,352,924 | |||||
Restricted stock issued | 1,188,303 | — | 1,188,303 | ||||||
Repurchase of common stock | — | (3,665,866 | ) | (3,665,866 | ) | ||||
Shares held to cover taxes on vesting restricted shares and other | — | (470,681 | ) | (470,681 | ) | ||||
Employee stock purchase plan participation | 13,603 | — | 13,603 | ||||||
Common Stock – March 31, 2018 | 208,830,397 | (80,412,114 | ) | 128,418,283 | |||||
Components of Accumulated Other Comprehensive Loss (dollars in millions) | |||||||||||||||||||||||
March 31, 2018 | December 31, 2017 | ||||||||||||||||||||||
Gross Unrealized | Income Taxes | Net Unrealized | Gross Unrealized | Income Taxes | Net Unrealized | ||||||||||||||||||
Foreign currency translation adjustments | $ | 1.8 | $ | (8.9 | ) | $ | (7.1 | ) | $ | 0.8 | $ | (8.8 | ) | $ | (8.0 | ) | |||||||
Changes in benefit plan net gain (loss) and prior service (cost)/credit | (49.1 | ) | (1.7 | ) | (50.8 | ) | (53.6 | ) | (0.9 | ) | (54.5 | ) | |||||||||||
Unrealized net gains (losses) on securities AFS | (124.9 | ) | 32.9 | (92.0 | ) | (39.5 | ) | 15.5 | (24.0 | ) | |||||||||||||
Total accumulated other comprehensive loss | $ | (172.2 | ) | $ | 22.3 | $ | (149.9 | ) | $ | (92.3 | ) | $ | 5.8 | $ | (86.5 | ) |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Gross Unrealized | Income Taxes | Net Unrealized | Gross Unrealized | Income Taxes | Net Unrealized | ||||||||||||||||||||||
Foreign currency translation adjustments | $ | (20.2 | ) | $ | (28.4 | ) | $ | (48.6 | ) | $ | (28.6 | ) | $ | (32.8 | ) | $ | (61.4 | ) | |||||||||
Changes in benefit plan net gain (loss) and prior service (cost)/credit | (69.1 | ) | 4.7 | (64.4 | ) | (70.6 | ) | 5.3 | (65.3 | ) | |||||||||||||||||
Unrealized net gains (losses) on available for sale securities | (17.7 | ) | 7.0 | (10.7 | ) | (22.0 | ) | 8.6 | (13.4 | ) | |||||||||||||||||
Total accumulated other comprehensive loss | $ | (107.0 | ) | $ | (16.7 | ) | $ | (123.7 | ) | $ | (121.2 | ) | $ | (18.9 | ) | $ | (140.1 | ) |
GROUP INC. AND SUBSIDIARIESGroup Inc. and Subsidiaries – NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNotes to Condensed Consolidated Financial Statements (Unaudited)
Changes in Accumulated Other Comprehensive Income (Loss) by Component (dollars in millions) | |||||||||||||||
Foreign currency translation adjustments | Changes in benefit plan net gain (loss) and prior service (cost) credit | Unrealized net gains (losses) on available for sale securities | Total AOCI | ||||||||||||
Balance as of December 31, 2017 | $ | (8.0 | ) | $ | (54.5 | ) | $ | (24.0 | ) | $ | (86.5 | ) | |||
Adoption of ASUs 2016-01 and 2018-02(1) | 3.3 | 0.3 | (4.1 | ) | (0.5 | ) | |||||||||
AOCI activity before reclassifications | (2.4 | ) | 3.3 | (60.1 | ) | (59.2 | ) | ||||||||
Amounts reclassified from AOCI | — | 0.1 | (3.8 | ) | (3.7 | ) | |||||||||
Net current period AOCI | (2.4 | ) | 3.4 | (63.9 | ) | (62.9 | ) | ||||||||
Balance as of March 31, 2018 | $ | (7.1 | ) | $ | (50.8 | ) | $ | (92.0 | ) | $ | (149.9 | ) | |||
Balance as of December 31, 2016 | $ | (61.4 | ) | $ | (65.3 | ) | $ | (13.4 | ) | $ | (140.1 | ) | |||
AOCI activity before reclassifications | 3.3 | 0.9 | 2.7 | 6.9 | |||||||||||
Amounts reclassified from AOCI | 9.5 | — | — | 9.5 | |||||||||||
Net current period AOCI | 12.8 | 0.9 | 2.7 | 16.4 | |||||||||||
Balance as of March 31, 2017 | $ | (48.6 | ) | $ | (64.4 | ) | $ | (10.7 | ) | $ | (123.7 | ) |
Foreign currency translation adjustments | Changes in benefit plan net gain (loss) and prior service (cost) credit | Unrealized net gains (losses) on available for sale securities | Total AOCI | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance as of December 31, 2016 | $ | (61.4 | ) | $ | (65.3 | ) | $ | (13.4 | ) | $ | (140.1 | ) | ||||||
AOCI activity before reclassifications | 3.3 | 0.9 | 2.7 | 6.9 | ||||||||||||||
Amounts reclassified from AOCI | 9.5 | – | – | 9.5 | ||||||||||||||
Net current period AOCI | 12.8 | 0.9 | 2.7 | 16.4 | ||||||||||||||
Balance as of March 31, 2017 | $ | (48.6 | ) | $ | (64.4 | ) | $ | (10.7 | ) | $ | (123.7 | ) | ||||||
Balance as of December 31, 2015 | $ | (65.7 | ) | $ | (69.3 | ) | $ | (7.1 | ) | $ | (142.1 | ) | ||||||
AOCI activity before reclassifications | 16.5 | (0.1 | ) | 2.6 | 19.0 | |||||||||||||
Amounts reclassified from AOCI | 4.7 | 1.0 | – | 5.7 | ||||||||||||||
Net current period AOCI | 21.2 | 0.9 | 2.6 | 24.7 | ||||||||||||||
Balance as of March 31, 2016 | $ | (44.5 | ) | $ | (68.4 | ) | $ | (4.5 | ) | $ | (117.4 | ) |
Quarters Ended March 31, | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2017 | 2016 | |||||||||||||||||||||||||||||
Gross Amount | Tax | Net Amount | Gross Amount | Tax | Net Amount | Income Statement line item | ||||||||||||||||||||||||
Foreign currency translation adjustments gains (losses) | $ | 8.1 | $ | 1.4 | $ | 9.5 | $ | 3.6 | $ | 1.1 | $ | 4.7 | Other Income | |||||||||||||||||
Changes in benefit plan net gain/(loss) and prior service (cost)/credit gains (losses) | – | – | – | 1.1 | (0.1 | ) | 1.0 | Operating Expenses | ||||||||||||||||||||||
Total Reclassifications out of AOCI | $ | 8.1 | $ | 1.4 | $ | 9.5 | $ | 4.7 | $ | 1.0 | $ | 5.7 |
Reclassifications Out of AOCI (dollars in millions) | |||||||||||||||||||||||||
Quarters Ended March 31, | |||||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||||
Gross Amount | Tax | Net Amount | Gross Amount | Tax | Net Amount | Income Statement line item | |||||||||||||||||||
Foreign currency translation adjustments gains | $ | — | $ | — | $ | — | $ | 8.1 | $ | 1.4 | $ | 9.5 | Other Income | ||||||||||||
Changes in benefit plan net gain/(loss) and prior service (cost)/credit losses | 0.1 | — | 0.1 | — | — | — | Operating Expenses | ||||||||||||||||||
Unrealized net gains (losses) on securities AFS | (5.2 | ) | 1.4 | (3.8 | ) | — | — | — | Other Income | ||||||||||||||||
Total Reclassifications out of AOCI | $ | (5.1 | ) | $ | 1.4 | $ | (3.7 | ) | $ | 8.1 | $ | 1.4 | $ | 9.5 |
Capital Components and Ratios (dollars in millions) | |||||||||||||||
CIT | CIT Bank, N.A. | ||||||||||||||
March 31, 2018 | December 31, 2017 | March 31, 2018 | December 31, 2017 | ||||||||||||
Common Equity Tier 1 Capital | $ | 6,321.5 | $ | 6,479.8 | $ | 4,730.9 | $ | 4,751.6 | |||||||
Tier 1 Capital | $ | 6,637.7 | $ | 6,775.4 | $ | 4,730.9 | $ | 4,751.6 | |||||||
Total Capital | $ | 7,528.2 | $ | 7,251.0 | $ | 5,165.5 | $ | 5,183.3 | |||||||
Risk-Weighted Assets | $ | 44,777.8 | $ | 44,537.7 | $ | 34,742.2 | $ | 34,527.2 | |||||||
Capital Ratios: | |||||||||||||||
Common Equity Tier 1 Capital Ratio: | |||||||||||||||
Actual | 14.1 | % | 14.5 | % | 13.6 | % | 13.8 | % | |||||||
Effective minimum ratios under Basel III guidelines(1) | 6.375 | % | 5.750 | % | 6.375 | % | 5.750 | % | |||||||
Tier 1 Capital Ratio: | |||||||||||||||
Actual | 14.8 | % | 15.2 | % | 13.6 | % | 13.8 | % | |||||||
Effective minimum ratios under Basel III guidelines(1) | 7.875 | % | 7.250 | % | 7.875 | % | 7.250 | % | |||||||
Total Capital Ratio: | |||||||||||||||
Actual | 16.8 | % | 16.3 | % | 14.9 | % | 15.0 | % | |||||||
Effective minimum ratios under Basel III guidelines(1) | 9.875 | % | 9.250 | % | 9.875 | % | 9.250 | % | |||||||
Tier 1 Leverage Ratio: | |||||||||||||||
Actual | 13.5 | % | 13.8 | % | 11.6 | % | 11.8 | % | |||||||
Required minimum ratio for capital adequacy purposes | 4.0 | % | 4.0 | % | 4.0 | % | 4.0 | % |
CIT | CIT Bank, N.A. | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2017 | December 31, 2016 | March 31, 2017 | December 31, 2016 | ||||||||||||||||
Common Equity Tier 1 Capital | $ | 9,271.6 | $ | 9,058.9 | $ | 4,695.2 | $ | 4,623.2 | |||||||||||
Total Capital | $ | 9,770.1 | $ | 9,535.2 | $ | 5,123.6 | $ | 5,053.4 | |||||||||||
Risk-weighted assets | $ | 64,330.0 | $ | 64,586.3 | $ | 34,252.0 | $ | 34,410.3 | |||||||||||
Capital Ratios: | |||||||||||||||||||
Common Equity Tier 1 Capital Ratio: | |||||||||||||||||||
Actual | 14.4 | % | 14.0 | % | 13.7 | % | 13.4 | % | |||||||||||
Effective minimum ratios under Basel III guidelines(1) | 5.750 | % | 5.125 | % | 5.750 | % | 5.125 | % | |||||||||||
Tier 1 Capital Ratio: | |||||||||||||||||||
Actual | 14.4 | % | 14.0 | % | 13.7 | % | 13.4 | % | |||||||||||
Effective minimum ratios under Basel III guidelines(1) | 7.250 | % | 6.625 | % | 7.250 | % | 6.625 | % | |||||||||||
Total Capital Ratio: | |||||||||||||||||||
Actual | 15.2 | % | 14.8 | % | 15.0 | % | 14.7 | % | |||||||||||
Effective minimum ratios under Basel III guidelines(1) | 9.250 | % | 8.625 | % | 9.250 | % | 8.625 | % | |||||||||||
Tier 1 Leverage Ratio: | |||||||||||||||||||
Actual | 14.8 | % | 13.9 | % | 11.3 | % | 10.9 | % | |||||||||||
Required minimum ratio for capital adequacy purposes | 4.0 | % | 4.0 | % | 4.0 | % | 4.0 | % |
GROUP INC. AND SUBSIDIARIESGroup Inc. and Subsidiaries – NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNotes to Condensed Consolidated Financial Statements (Unaudited)
Commitments (dollars in millions) | |||||||||||||||
March 31, 2018 | |||||||||||||||
Due to Expire | December 31, 2017 | ||||||||||||||
Within One Year | After One Year | Total Outstanding | Total Outstanding | ||||||||||||
Financing Commitments | |||||||||||||||
Financing assets (1) (2) | $ | 2,018.1 | $ | 4,689.7 | $ | 6,707.8 | $ | 6,351.1 | |||||||
Letters of credit | |||||||||||||||
Standby letters of credit | 31.8 | 212.8 | 244.6 | 213.3 | |||||||||||
Other letters of credit | 14.3 | — | 14.3 | 14.2 | |||||||||||
Guarantees | |||||||||||||||
Deferred purchase agreements | 1,870.6 | — | 1,870.6 | 2,068.1 | |||||||||||
Guarantees, acceptances and other recourse obligations | 2.1 | — | 2.1 | 2.1 | |||||||||||
Purchase and Funding Commitments | |||||||||||||||
Rail and other purchase commitments (1) | 252.9 | 27.5 | 280.4 | 222.9 |
March 31, 2017 | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Due to Expire | December 31, 2016 | ||||||||||||||||||
Within One Year | After One Year | Total Outstanding | Total Outstanding | ||||||||||||||||
Financing Commitments | |||||||||||||||||||
Financing assets | $ | 1.550.9 | $ | 4,670.1 | $ | 6,221.0 | $ | 6,008.1 | |||||||||||
Letters of credit | |||||||||||||||||||
Standby letters of credit | 45.2 | 210.8 | 256.0 | 232.2 | |||||||||||||||
Other letters of credit | 16.3 | – | 16.3 | 14.0 | |||||||||||||||
Guarantees | |||||||||||||||||||
Deferred purchase agreements | 1,875.6 | – | 1,875.6 | 2,060.5 | |||||||||||||||
Guarantees, acceptances and other recourse obligations | 1.1 | – | 1.1 | 1.6 | |||||||||||||||
Purchase and Funding Commitments | |||||||||||||||||||
Aerospace purchase commitments | 951.0 | 7,580.3 | 8,531.3 | 8,683.5 | |||||||||||||||
Rail and other purchase commitments | 270.7 | 43.0 | 313.7 | 300.7 |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)Order in place and oversight was transferred to the Federal Reserve Board New York and CIT succeeded to the Consent Order obligations. The FRB’s Consent Order remains outstanding although improvements required by the Consent Order have been implemented including the completion of an Independent Foreclosure Review in 2014, resulting in approximately $12.7 million of remediation payments being made payable to borrowers.NOTE 14 — CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSDuring the third quarter of 2015, Strategic Credit Partners Holdings LLC (the “JV”), a joint venture between CIT Group Inc. (“CIT”) and TPG Special Situations Partners (“TSSP”), was formed. The JV extends credit in senior-secured, middle-market corporate term loans, and, in certain circumstances, is a participantSubsidiaries – Notes to such loans. Participation could be in corporate loans originated by CIT. The JV may acquire other types of loans, such as subordinate corporate loans, second lien loans, revolving loans, asset backed loans and real estate loans. Through March 31, 2017, loans of $220.0 million were sold to the joint venture. CIT also maintains an equity interest of 10% in the JV, and our investment was $7.1 million and $5.4 million at March 31, 2017 and December 31, 2016, respectively.Condensed Consolidated Financial Statements (Unaudited)The Company was party to two joint ventures (collectively “TC-CIT Aviation”) between CIT Aerospace and Century Tokyo Leasing Corporation (“CTL”). CIT sold TC-CIT Aviation on March 31, 2017 making its minority equity investment $0 and $81 million at March 31, 2017 and December 31, 2016, respectively. During the quarter ended March 31, 2017, CIT recorded servicing fees of $3.4 million and recognized a gain of $13.7 million on the sale of TC-CIT Aviation in discontinued operations.
Commercial Banking | Consumer Banking | Non-Strategic Portfolios | Corporate and Other | Total CIT | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Quarter Ended March 31, 2017 | ||||||||||||||||||||||
Interest income | $ | 307.5 | $ | 100.0 | $ | 7.0 | $ | 41.2 | $ | 455.7 | ||||||||||||
Interest (expense) benefit | (119.8 | ) | 6.5 | (5.0 | ) | (44.8 | ) | (163.1 | ) | |||||||||||||
Provision for credit losses | (49.2 | ) | (0.5 | ) | – | �� | – | (49.7 | ) | |||||||||||||
Rental income on operating leases | 251.3 | – | – | – | 251.3 | |||||||||||||||||
Other income | 72.3 | 7.9 | (2.9 | ) | 1.8 | 79.1 | ||||||||||||||||
Depreciation on operating lease equipment | (73.5 | ) | – | – | – | (73.5 | ) | |||||||||||||||
Maintenance and other operating lease expenses | (53.8 | ) | – | – | – | (53.8 | ) | |||||||||||||||
Operating expenses / loss on debt extinguishment and deposit redemption | (178.7 | ) | (95.6 | ) | (2.0 | ) | (35.3 | ) | (311.6 | ) | ||||||||||||
Income (loss) from continuing operations before (provision) benefit for income taxes | $ | 156.1 | $ | 18.3 | $ | (2.9 | ) | $ | (37.1 | ) | $ | 134.4 | ||||||||||
Select Period End Balances | ||||||||||||||||||||||
Loans | $ | 22,878.6 | $ | 6,812.8 | $ | – | $ | – | $ | 29,691.4 | ||||||||||||
Credit balances of factoring clients | 1,547.1 | – | – | – | 1,547.1 | |||||||||||||||||
Assets held for sale | 336.4 | 64.1 | 162.1 | – | 562.6 | |||||||||||||||||
Operating lease equipment, net | 7,516.2 | – | – | – | 7,516.2 |
Commercial Banking | Consumer Banking | Non-Strategic Portfolios | Corporate and Other | Total CIT | |||||||||||||||
Quarter Ended March 31, 2018 | |||||||||||||||||||
Interest income | $ | 314.9 | $ | 85.2 | $ | 2.4 | $ | 48.7 | $ | 451.2 | |||||||||
Interest expense (benefit) | 156.3 | (24.3 | ) | 1.7 | 46.8 | 180.5 | |||||||||||||
Provision for credit losses | 67.2 | 1.6 | — | — | 68.8 | ||||||||||||||
Rental income on operating leases | 253.6 | — | — | — | 253.6 | ||||||||||||||
Other non-interest income | 78.0 | 11.5 | 1.2 | 14.0 | 104.7 | ||||||||||||||
Depreciation on operating lease equipment | 76.4 | — | — | — | 76.4 | ||||||||||||||
Maintenance and other operating lease expenses | 57.4 | — | — | — | 57.4 | ||||||||||||||
Operating expenses / loss on debt extinguishment and deposit redemption | 183.1 | 96.0 | 2.2 | 0.1 | 281.4 | ||||||||||||||
Income (loss) from continuing operations before provision (benefit) for income taxes | $ | 106.1 | $ | 23.4 | $ | (0.3 | ) | $ | 15.8 | $ | 145.0 | ||||||||
Select Period End Balances | |||||||||||||||||||
Loans | $ | 23,345.9 | $ | 6,107.7 | $ | — | $ | — | $ | 29,453.6 | |||||||||
Credit balances of factoring clients | 1,549.0 | — | — | — | 1,549.0 | ||||||||||||||
Assets held for sale | 1,376.3 | 864.0 | 58.5 | — | 2,298.8 | ||||||||||||||
Operating lease equipment, net | 6,774.9 | — | — | — | 6,774.9 | ||||||||||||||
Quarter Ended March 31, 2017 | |||||||||||||||||||
Interest income | $ | 307.5 | $ | 100.0 | $ | 7.0 | $ | 41.2 | $ | 455.7 | |||||||||
Interest expense (benefit) | 119.8 | (6.5 | ) | 5.0 | 44.8 | 163.1 | |||||||||||||
Provision for credit losses | 49.2 | 0.5 | — | — | 49.7 | ||||||||||||||
Rental income on operating leases | 251.3 | — | — | — | 251.3 | ||||||||||||||
Other non-interest income | 72.3 | 7.9 | (2.9 | ) | 1.8 | 79.1 | |||||||||||||
Depreciation on operating lease equipment | 73.5 | — | — | — | 73.5 | ||||||||||||||
Maintenance and other operating lease expenses | 53.8 | — | — | — | 53.8 | ||||||||||||||
Operating expenses / loss on debt extinguishment | 178.7 | 95.6 | 2.0 | 35.3 | 311.6 | ||||||||||||||
Income (loss) from continuing operations before provision (benefit) for income taxes | $ | 156.1 | $ | 18.3 | $ | (2.9 | ) | $ | (37.1 | ) | $ | 134.4 | |||||||
Select Period End Balances | |||||||||||||||||||
Loans | $ | 22,878.6 | $ | 6,812.8 | $ | — | $ | — | $ | 29,691.4 | |||||||||
Credit balances of factoring clients | 1,547.1 | — | — | — | 1,547.1 | ||||||||||||||
Assets held for sale | 336.4 | 64.1 | 162.1 | — | 562.6 | ||||||||||||||
Operating lease equipment, net | 7,516.2 | — | — | — | 7,516.2 |
Commercial Banking | Consumer Banking | Non-Strategic Portfolios | Corporate and Other | Total CIT | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Quarter Ended March 31, 2016 | ||||||||||||||||||||||
Interest income | $ | 324.0 | $ | 105.3 | $ | 25.0 | $ | 28.6 | $ | 482.9 | ||||||||||||
Interest expense | (130.2 | ) | (8.0 | ) | (14.5 | ) | (42.3 | ) | (195.0 | ) | ||||||||||||
Provision for credit losses | (86.4 | ) | (3.1 | ) | – | – | (89.5 | ) | ||||||||||||||
Rental income on operating leases | 260.2 | – | 3.9 | – | 264.1 | |||||||||||||||||
Other income | 58.0 | 8.2 | 14.4 | 4.2 | 84.8 | |||||||||||||||||
Depreciation on operating lease equipment | (61.3 | ) | – | – | – | (61.3 | ) | |||||||||||||||
Maintenance and other operating lease expenses | (48.9 | ) | – | – | – | (48.9 | ) | |||||||||||||||
Operating expenses / loss on debt extinguishment | (197.4 | ) | (85.1 | ) | (12.2 | ) | (37.0 | ) | (331.7 | ) | ||||||||||||
Income (loss) from continuing operations before (provision) benefit for income taxes | $ | 118.0 | $ | 17.3 | $ | 16.6 | $ | (46.5 | ) | $ | 105.4 | |||||||||||
Select Period End Balances | ||||||||||||||||||||||
Loans | $ | 23,779.7 | $ | 7,169.0 | $ | – | $ | – | $ | 30,948.7 | ||||||||||||
Credit balances of factoring clients | 1,361.0 | – | – | – | 1,361.0 | |||||||||||||||||
Assets held for sale | 260.5 | 50.7 | 1,176.2 | – | 1,487.4 | |||||||||||||||||
Operating lease equipment, net | 7,071.4 | – | – | – | 7,071.4 |
Management’s Discussion and Analysis of Financial Condition and Results of OperationsQuantitative and Qualitative Disclosures about Market RiskBACKGROUND“we”"we", “our”"our", “CIT”"CIT" or the “Company”"Company"), has providedis a bank holding company ("BHC") and a financial solutions to its clients since its formationholding company ("FHC"). Formed in 1908. We provide1908, CIT provides financing, leasing and advisory services principally to middle marketmiddle-market companies in a wide variety of industries primarily in North America. CIT is a bank holding company (“BHC”) and a financial holding company (“FHC”). CIT providesWe also provide a full range of banking and related services to commercial and individual customers through its bankour banking subsidiary, CIT Bank, National Association, a national banking association (“N.A. ("CIT Bank” or “CIT Bank, N.A.”Bank"), which includes 70 branches located in Southern California, and its online bank, bankoncit.com and through other offices in the U.S. and select international locations..(“FRB”("FRB") and the Federal Reserve Bank of New York (“FRBNY”("FRBNY") under the U.S. Bank Holding Company Act of 1956, as amended. CIT Bank N.A. is regulated by the Office of the Comptroller of the Currency of the U.S. Department of the Treasury (“OCC”("OCC").Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations andQuantitative and Qualitative Disclosures about Market Risk ("MD&A") contain financial terms that are relevant to our business, and aGlossary of key terms has been updated and is included at the end ofItem 1. Business Overview in our Annual Report on Form 10-K for the year ended December 31, 2016. In limited instances, 2017.“"Non-GAAP Financial Measurements”Measurements" for a reconciliation of these financial measures to comparable financial measures based on U.S. GAAP.2017 KEY TRANSACTIONSThroughout this MD&A we reference "Notes" to our financial statements. These Notes are included in As disclosed inNote 16 — Subsequent Events inItem 1. Consolidated Financial Information, several key transactions were completed or announced in April 2017:Statements.nCompleted Commercial Air SalenCompleted Redemption of Senior Unsecured DebtnCompleted Senior Unsecured Debt Tender OffernCommenced Common Equity Tender Offer2017 FIRST QUARTER2018 FINANCIAL RESULTSexcerpt displaystable summarizes the Company’s results in accordance with GAAP as included in the Consolidated Statements of Income, for the quarters ended March 31, 2018 and 2017, and 2016, with equivalent balances for the quarter ended December 31, 2016. Quarters Ended (dollars in millions) March 31,
2017 December 31,
2016 March 31,
2016Income (loss) from continuing operations before (provision) benefit for income taxes $ 134.4 $ (432.4 ) $ 105.4 (Provision) benefit for income taxes (56.2 ) 6.6 (44.4 ) Income (loss) from continuing operations 78.2 (425.8 ) 61.0 Discontinued operation Income (loss) from discontinued operations, net of taxes 101.7 (716.7 ) 85.0 Net income (loss) $ 179.9 $ (1,142.5 ) $ 146.0 Diluted income per common share (Loss) income from continuing operations $ 0.38 $ (2.10 ) $ 0.30 (Loss) income from discontinued operations, net of taxes 0.50 (3.55 ) 0.42 Diluted (loss) income per common share $ 0.88 $ (5.65 ) $ 0.72 Average number of common shares — diluted (thousands) 203,348 202,083 202,136 Our first quarter2017. In addition, we provide results that are not in accordance with GAAP, and are reconciled to GAAP in the "Non-GAAP Financial Measurements" section at the end of this MD&A. Further detail on the 2017 results from continuing operations reflected solid business activity, which resultednoteworthy items is presented in a slight increasetabular format further in financing and leasing assets over the prior quarter. Finance revenues declined primarily from reduced purchase accounting accretion and prepayment benefits, which were largely offset by lower funding costs.Item 2. Management’s Discussion and Analysis andItem 3.Quantitative and Qualitative Disclosures about Market Risk 53Net income was up from the year-agothis section, and prior quarters, while net income excludingyear noteworthy items(1) totaled $163 million, $0.80 per diluted share, compared to $142 million, $0.70 per diluted share, are reconciled in the year-ago quarter and $210 million, $1.04 per diluted share, in the prior quarter."Non-GAAP Financial Measurements" section. Quarters Ended GAAP Results March 31, 2018 December 31, 2017 March 31, 2017 Income (loss) from continuing operations available to common shareholders $ 103.7 $ (92.6 ) $ 78.2 Income (loss) from discontinued operations, net of taxes (6.7 ) (5.2 ) 101.7 Net income (loss) available to common shareholders $ 97.0 $ (97.8 ) $ 179.9 Diluted income per common share Income (loss) from continuing operations available to common shareholders $ 0.79 $ (0.70 ) $ 0.38 Income (loss) from discontinued operations, net of taxes (0.05 ) (0.04 ) 0.50 Diluted income (loss) per common share available to common shareholders $ 0.74 $ (0.74 ) $ 0.88 Average number of common shares — diluted (thousands) 131,588 131,343 203,348 Non-GAAP Results, excluding noteworthy items Income from continuing operations available to common shareholders $ 96.9 $ 130.3 $ 109.4 (Loss) income from discontinued operations, net of taxes (6.7 ) (5.2 ) 53.7 Net income available to common shareholders $ 90.2 $ 125.1 $ 163.1 Diluted income per common share Income from continuing operations available to common shareholders $ 0.74 $ 0.99 $ 0.54 (Loss) income from discontinued operations, net of taxes (0.05 ) (0.04 ) 0.26 Diluted income per common share available to common shareholders $ 0.69 $ 0.95 $ 0.80 Average number of common shares — diluted (thousands) 131,588 131,343 203,348 whileincome from continuing operations available to common shareholders excluding noteworthy items1 was down, as a decline in net finance revenue and an increase in the provision for credit losses were partially offset by lower operating expenses. The decline was partially offset by higher other non-interest income compared to the year-ago quarter.The increase in income from continuing operations excluding noteworthy items(2) totaled $109 million, $0.54 per diluted common share compared to $57the year-ago quarter reflects the decline in the average number of diluted common shares outstanding due to significant share repurchases over the past four quarters that more than offset the decline in income.$0.28was down from the year-ago quarter and up from the prior quarter, while net income available to common shareholders excluding noteworthy items2 of $90 million, or $0.69 per diluted common share, was down from both quarter comparative results. While the trends reflected the results from continuing operations, the decline from the year-ago quarter was also affected by the Commercial Air results in discontinued operations in that quarter, prior to the sale of Commercial Air on April 4, 2017. Income from Continuing Operations Available to Common Shareholders Net Income Available to Common Shareholders GAAP Results $ 103.7 $ 0.79 $ 97.0 $ 0.74 Suspended depreciation benefits related to the European Rail business (NACCO) held for sale (6.8 ) (0.05 ) (6.8 ) (0.05 ) Non-GAAP Results $ 96.9 $ 0.74 $ 90.2 $ 0.69 $125the sale of the TC-CIT joint venture.$0.62 per diluted share,at March 31, 2018, down from $184 million at December 31, 2017 and $340 million at March 31, 2017. Financial Freedom loans totaled $254 million at March 31, 2018, compared to $273 million at December 31, 2017 and $353 million at March 31, 2017.prior quarter.Financial Freedom servicing business.Noteworthy items (after tax) infirst quarter of 2017 indiscussions and data presented throughout the following sections reflect CIT balances on a continuing operations included:basis.n2 $7 million ($0.03 per diluted share) charge related to a currency translation adjustment relating to international business exits;n$10 million ($0.05 per diluted share) in restructuring expenses; andn$14 million ($0.07 per diluted share) in deferred tax expense related to the restructuring of legal entities in preparation for the Commercial Air sale.Noteworthy items (after tax) in the first quarter of 2017 in discontinued operations included:n$13 million ($0.06 per diluted share) gain on the sale of the TC-CIT joint venture;n$34 million ($0.17 per diluted share) in secured debt extinguishment costs; andn$69 million ($0.34 per diluted share) of suspended depreciation benefits related to the Commercial Air business.ROTCE(3) for the quarter was 8.08%. ROTCE excluding noteworthy(3) items was 7.34%. ROTCE for continuing operations was 7.40%, excluding noteworthy items and pro forma for the reduction of approximately $3 billion in common equity associated with the Commercial Air sale.We reconcile our GAAP balances in our non-GAAP reconciliation section at the end of Item 7. Management’s Discussion and Analysis. These non-GAAP measures and others that follow 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.(1)Net income excluding noteworthy items is a non-GAAP measure; see “Non-GAAP Financial Measurements” for a reconciliation of non-GAAP to GAAP financial information. (2)Income from continuing operations excluding noteworthy items is a non-GAAP measure; see “Non-GAAP Financial Measurements” for a reconciliation of non-GAAP to GAAP financial information.(3)Adjusted Return on Tangible Common Equity, which adjusts tangible common equity for the reversal of the valuation allowance and the amortization of intangibles in the numerator and the disallowed deferred tax asset related to regulatory capital in the denominator, and ROTCE excluding noteworthy items are non-GAAP measures; see “Non-GAAP Financial Measurements” for a reconciliation of non-GAAP to GAAP financial information.Income from discontinued operations (after taxes) for 2017 and the prior-year quarter were driven by Aerospace, partially offset by Financial Freedom, our reverse mortgage servicing business. The prior quarter results were driven by noteworthy items. SeeDiscontinued Operations section further below for discussion on results.Net finance revenue(4) (“NFR”)NFR was $417 million in the current quarter, compared to $421 million in the prior quarter and $442 million in the year-ago quarter. NFR as a percentage of average earning assets (“net finance margin” or “NFM”) was relatively flat from the prior quarter and decreased 10 basis points from the year-ago quarter. The decline in NFM from the year-ago quarter generally reflected lower purchase accounting accretion and a decline in Rail portfolio gross yields, mostly offset by lower interest expense and maintenance expense. AEA was $46.6 billion in 2017, down from $48.1 billion in the prior-year quarter and from $47.0 billion in the prior quarter.Provision for credit lossesThe provision for credit losses of $50 million was up from the prior quarter, primarily driven by a specific reserve on a single retail account in the factoring business of Commercial Banking. The provision was down from the prior-year quarter, which included an increase in reserves related to the energy and maritime portfolios.Credit metricsNet charge-offs were $28 million (0.37% of average finance receivables), compared to $24 million (0.32%) in the prior quarter and $32 million (0.42%) in the year-ago quarter, all related to the Commercial Banking segment. Non-accrual loans of $259 million (0.87% of finance receivables) were down modestly from the prior quarter, driven by lower balances in the Commercial Banking segment.Other incomeOther income was $79 million in the current quarter, compared to a loss of $118 million in the prior quarter and income of $85 million in the year-ago quarter. While fee revenues and factoring commissions remained steady compared to the prior and the year-ago quarters, there were noteworthy items in each period, as discussed in further detail in Non-Interest Income section.Operating expensesOperating expenses totaled $312 million in the current quarter, $341 million in the prior quarter and $330 million in the year-ago quarter. Operating expenses excluding restructuring costs and intangible asset amortization(5) was $291 million in the current quarter, $331 million in the prior quarter and $303 million in the year-ago quarter.(4)Net finance revenue and average earning assets are non-GAAP measures; see “Non-GAAP Financial Measurements” for a reconciliation of non-GAAP to GAAP financial information.(5)Operating expenses excluding restructuring costs and intangible asset amortization, net efficiency ratio and net efficiency ratio excluding noteworthy items are non-GAAP measures. See “Non-GAAP Measurements” at the end of this press release and starting on page 27 for reconciliation of non-GAAP to GAAP financial information.54 CIT GROUP INC
INC. 43Operating expenses in the current quarter benefited from the timing of technology expenditures, which are expected to be at a higher rate over the remainder of the year, while noteworthy items and other elevated costs in the prior quarter were mostly related to legacy OneWest Bank matters and were the main drivers of the sequential quarter decline in this metric. The decrease from the year-ago quarter predominantly relates to our expense reduction initiatives.We continue to make progress towards achieving our goal of reducing annual operating expense by $150 million by 2018 through organizational alignment, technology and operations improvements and third party initiatives. As of the end of the current quarter, we have achieved approximately 40% of that goal and remain on track to reach our target.(Provision) benefit for income taxesThe provision for income taxes in the current quarter of $56 million included $14 million in deferred tax expense related to the restructuring of legal entities in preparation for the Commercial Air sale. The effective tax rate in the current quarter was 42%. Excluding discrete items, the effective tax rate was 33% for the quarter.Financing and Leasing AssetsFinancing and leasing assets (“FLA”) of $37.8 billion were up slightly from December 31, 2016, as an increase in Commercial Banking, driven by higher factoring receivables, offset lower balances in Commercial Finance and run-off in the LCM portfolio in the Consumer Banking segment and NSP.Cash (cash and due from banks andinterest bearing deposits) and Investment SecuritiesCash (cash and due from banks andinterest bearing deposits) totaled $6.2 billion at March 31, 2017, down slightly from $6.4 billion at December 31, 2016.Investment securities totaled $4.5 billion, essentially unchanged from December 31, 2016, as an increase in CIT Bank investments was offset by a reduction at the parent to generate cash to repay debt reported in discontinued operations prior to the Commercial Air sale.Deposits and BorrowingsDeposits were $32.3 billion, essentially unchanged from December 31, 2016, and represented approximately 69% of CIT’s funding at March 31, 2017, up from 68% in the prior quarter. Borrowings totaled $14.7 billion, down slightly from December 31, 2016. Unsecured and secured borrowings comprised 22% and 9% of the funding mix, respectively, at March 31, 2017. SeeNote 16 — Subsequent Events inItem 1. Financial Information for redemption and tender offer results related to borrowings.CapitalCommon stockholders’ equity and tangible common equity increased from the prior quarter reflecting earnings. Similarly, book value per share and tangible book value per share increased in the quarter mostly due to the higher common stockholders’ equity, while the share count remained relatively stable. The Common Equity Tier 1 and Total capital ratios increased from the prior quarter. Risk-weighted assets decreased, reflecting the decline in balance sheet assets.DISCONTINUED OPERATIONSDiscontinued operations are comprised of the Commercial Air leasing business, which was sold on April 4, 2017, Business Air, and Financial Freedom, our reverse mortgage servicing business. Income from discontinued operations (after taxes) was $102 million, driven by income from discontinued operations, net of taxes, of $111 million from Aerospace, and partially offset by a loss from Financial Freedom. Discontinued operations after tax income totaled $85 million in the prior-year quarter and a loss of $717 million in the prior quarter. The prior quarter loss reflected an $847 million net tax expense related to the Commercial Air sale.SeeNote 2 — Discontinued Operations inItem 1. Financial Information for further details and condensed balance sheets and income statements andNote 13 —Contingencies for discussion related to the Financial Freedom servicing businessSeeNote 16 — Subsequent Events for discussion on the Commercial Air sale.AerospaceAerospace pre-tax earnings totaled $190 million, $98 million and $194 million for the quarters ended March 31, 2017 and 2016, and December 31, 2016, respectively. In comparison to the prior-year quarter, both the current and prior quarters benefited from suspended depreciation of $113 million and $106 million, respectively. When a long-lived asset is classified as AHFS, depreciation expense is no longer recognized, and the asset is evaluated for impairment with any such charge recorded in other income.On March 31, 2017, CIT completed the sale of its 30 percent ownership stake in the commercial aircraft leasing joint ventures TC-CIT Aviation Ireland and TC-CIT Aviation U.S., Inc. to its joint venture partner; Tokyo Century Corporation, which resulted in an approximately $14 million gain.Item 2. Management’s Discussion and Analysis andItem 3.Quantitative and Qualitative Disclosures about Market Risk 55Financing and leasing assets totaled $10.6 billion, $10.7 billion and $10.8 billion at March 31, 2017, December 31, 2016 and March 31, 2016, respectively. Of those balances, Commercial Air consisted of $10.3 billion, $10.2 billion and $10.0 billion, respectively, most of which represents operating lease equipment. The remaining amounts reflected loans in the Business Air portfolio.Reverse Mortgage ServicingFinancial Freedom, a reverse mortgage servicing business, pre-tax loss totaled $15 million in the quarter, compared to pre-tax losses of $7 million in the prior-year quarter and $23 million in the prior quarter.The prior quarter loss included a higher interest curtailment reserve related to reverse mortgages arising out of servicing errors. As a servicer of reverse mortgage loans, the servicing guides provide that servicers may become liable for curtailed interest for certain delays in completing the foreclosure process with respect to defaulted loans in accordance with servicer guides. See Item 4. Controls and Procedures.The $421 million of assets of discontinued operations include primarily Home Equity Conversion Mortgages (“HECMs”) and servicing advances. The liabilities of discontinued operations include reverse mortgage servicing liabilities, which relates primarily to loans serviced for third party investors, secured borrowings and contingent liabilities. Continuing operations includes a separate portfolio of reverse mortgages of $859 million at March 31, 2017, which are recorded in the Consumer Banking segment and are serviced by Financial Freedom.Unless specifically noted, the discussions and data presented throughout the following sections reflect CIT balances on a continuing operations basis.Results From Continuing Operations:
NET FINANCE REVENUEThe following tables present management’s view of consolidated NFR.
Net Finance Revenue ("NFR")(1)3(dollars in millions) Quarters Ended March 31,
2017 December 31,
2016 March 31,
2016Interest income $ 455.7 $ 474.1 $ 482.9 Rental income on operating leases 251.3 252.2 264.1 Finance revenue 707.0 726.3 747.0 Interest expense (163.1 ) (178.3 ) (195.0 ) Depreciation on operating lease equipment (73.5 ) (69.8 ) (61.3 ) Maintenance and other operating lease expenses (53.8 ) (57.5 ) (48.9 ) Net finance revenue $ 416.6 $ 420.7 $ 441.8 $ 46,638.9 $ 46,964.7 $ 48,107.1 Net finance margin 3.57 % 3.58 % 3.67 % (1)NFR and AEA are non-GAAP measures; see “Non-GAAP Financial Measurements” sections for a reconciliation of non-GAAP to GAAP financial information.NFR and NFMNet Finance Margin ("NFM")3 are key metrics used by management to measure the profitability of our earning assets. NFR includes interest and yield-related fee income on our loans, and capital leases, rental income on our operating lease equipment, and interest and dividend income on interest-bearing cash and investments, less funding costs and depreciation, maintenance and other operating lease expenses from our operating lease equipment. Since our asset composition includeshigh level of operating lease equipment (16% of AEA fortable later in this section.quarter ended March 31, 2017), NFM is a more appropriate metric for CIT than net interest margin (“NIM”) (a common metric used by other BHCs), as NIM does not fully reflectaverage balance sheet and related rates, along with the earnings of our portfolio because it includes the impact of debt costs on all our assets but excludes the net revenue (rental income less depreciationNFR and NFM. Quarters Ended March 31, 2018 December 31, 2017 March 31, 2017 Average
Balance Revenue / Expense Average
Rate (%) Average
Balance Revenue / Expense Average
Rate (%) Average
Balance Revenue / Expense Average
Rate (%)Interest bearing cash deposits $ 2,100.8 $ 7.0 1.33 % $ 2,270.2 $ 8.9 1.57 % $ 5,652.4 $ 12.5 0.88 % Investments and securities purchased under agreement to resell 6,345.6 43.3 2.73 % 6,067.9 37.6 2.48 % 4,452.4 31.1 2.79 % 28,753.5 415.1 5.77 % 28,225.3 417.1 5.91 % 28,705.3 419.9 5.85 % 37,199.9 465.4 5.00 % 36,563.4 463.6 5.07 % 38,810.1 463.5 4.78 % 7,934.6 119.8 6.04 % 7,841.0 120.4 6.14 % 7,500.9 124.0 6.61 % Indemnification assets 130.6 (14.2 ) (43.49 )% 157.7 (15.9 ) (40.33 )% 327.9 (7.8 ) (9.52 )% 45,265.1 571.0 5.05 % 44,562.1 568.1 5.10 % 46,638.9 579.7 4.97 % Non-interest earning assets Cash and due from banks 246.8 403.4 783.6 Allowance for loan losses (434.6 ) (424.7 ) (436.0 ) All other non-interest bearing assets 2,683.0 2,793.5 2,321.3 Assets of discontinued operation 480.3 532.6 12,969.7 Total Average Assets $ 48,240.6 $ 47,866.9 $ 62,277.5 Liabilities Interest bearing deposits and borrowings Deposits $ 28,595.2 97.1 1.36 % $ 28,133.7 92.1 1.31 % $ 30,953.0 94.0 1.21 % Borrowings 9,045.4 83.4 3.69 % 8,630.9 76.6 3.55 % 14,815.0 69.1 1.87 % Total interest-bearing liabilities 37,640.6 180.5 1.92 % 36,764.6 168.7 1.84 % 45,768.0 163.1 1.43 % Non-interest bearing deposits 1,456.1 1,501.3 1,387.3 Other non-interest bearing liabilities 1,406.0 1,618.3 1,778.8 Liabilities of discontinued operation 496.9 541.9 3,223.6 Noncontrolling interests — — 0.3 Stockholders' equity 7,241.0 7,440.8 10,119.5 Total Average Liabilities and Shareholders' Equity $ 48,240.6 $ 47,866.9 $ 62,277.5 Net revenue spread 3.13 % 3.26 % 3.55 % Impact of non-interest bearing sources 0.32 % 0.32 % 0.03 % $ 390.5 3.45 % $ 399.4 3.59 % $ 416.6 3.57 % Adjusted NFR / NFM (excluding noteworthy items) $ 381.2 3.37 % $ 390.6 3.51 % $ 416.6 3.57 % The average balances presented are derived based on month end balances during the year. Tax exempt income was not significant in any of the periods presented. Average rates are impacted by PAA accretion and amortization. The balance and rate presented is calculated net of average credit balances for factoring clients. Non-accrual loans and related income are included in the respective categories. Operating lease rental income is a significant source of revenue; therefore we have presented the rental revenues net of depreciation and net of maintenance and other operating lease expenses. other operating lease expenses) from operating leases.Analysis and Item 3. Quantitative and Qualitative Disclosures about Market Risk56 CIT GROUP INCincludes average balances from revenue generating assets along with the respective revenues, and average balances of deposits and borrowings along with the respective interest expenses.Average Balances and Rates(1) for the Quarters Ended (dollars in millions) March 31, 2017 December 31, 2016 March 31, 2016 Average
Balance Revenue /
Expense Average
Rate (%) Average
Balance Revenue /
Expense Average
Rate (%) Average
Balance Revenue /
Expense Average
Rate (%)Interest-bearing cash $ 5,652.4 $ 12.5 0.88 % $ 5,918.2 $ 7.5 0.51 % $ 6,863.2 $ 8.4 0.49 % Investment securities 4,452.4 31.0 2.79 % 3,962.2 30.4 3.07 % 2,923.6 22.5 3.07 % 28,705.3 420.0 5.85 % 29,298.0 444.5 6.07 % 30,935.1 455.1 5.88 % 7,500.9 124.0 6.61 % 7,435.1 124.9 6.72 % 6,989.8 153.9 8.80 % Indemnification assets 327.9 (7.8 ) (9.50 )% 351.3 (8.3 ) (9.42 )% 395.5 (3.1 ) (3.13 )% $ 46,638.9 579.7 4.97 % $ 46,964.8 599.0 5.10 % $ 48,107.2 636.8 5.29 % Interest-bearing deposits $ 30,953.0 $ 94.0 1.21 % $ 31,139.0 $ 96.4 1.24 % $ 31,829.1 $ 99.5 1.25 % 14,815.0 69.1 1.87 % 14,676.5 81.9 2.23 % 16,134.0 95.5 2.37 % Total interest-bearing liabilities $ 45,768.0 163.1 1.43 % $ 45,815.5 178.3 1.56 % $ 47,963.1 195.0 1.63 % NFR and NFM $ 416.6 3.57 % $ 420.7 3.58 % $ 441.8 3.67 % The table below disaggregates CIT’spresents disaggregated quarter-over-quarter changes in net interest revenue and operating lease margins as presented in the preceding tablestable between volume (level of lending or borrowing) and rate (rates charged customers or incurred on borrowings). Volume change is calculated as change in volume times the previous rate, while rate change is change in rate times the previous volume. The rate/volume change, change in rate times change in volume, is allocated between volume change and rate change at the ratio each component bears to the absolute value of their total. March 2017 Over
December 2016 Comparison March 2017 Over
March 2016 Comparison Increase (Decrease)
Due To Change In: Increase (Decrease)
Due To Change In: Volume Rate Net Volume Rate Net Interest-bearing cash $ (0.4 ) $ 5.4 $ 5.0 $ (1.7 ) $ 5.8 $ 4.1 Investments 3.6 (3.0 ) 0.6 10.8 (2.3 ) 8.5 (8.9 ) (15.6 ) (24.5 ) (32.6 ) (2.5 ) (35.1 ) 1.1 (2.0 ) (0.9 ) 10.6 (40.5 ) (29.9 ) Indemnification assets 0.6 (0.1 ) 0.5 0.6 (5.3 ) (4.7 ) Total earning assets $ (4.0 ) $ (15.3 ) $ (19.3 ) $ (12.3 ) $ (44.8 ) $ (57.1 ) Interest-bearing deposits $ (0.6 ) $ (1.8 ) $ (2.4 ) $ (2.7 ) $ (2.8 ) $ (5.5 ) 0.8 (13.6 ) (12.8 ) (7.3 ) (19.1 ) (26.4 ) Total interest-bearing liabilities $ 0.2 $ (15.4 ) $ (15.2 ) $ (10.0 ) $ (21.9 ) $ (31.9 ) (1) March 2018 Over
December 2017 Comparison March 2018 Over
March 2017 Comparison Increase (Decrease)
Due To Change In: Increase (Decrease)
Due To Change In: Volume Rate Net Volume Rate Net Interest-bearing cash $ (0.6 ) $ (1.3 ) $ (1.9 ) $ (10.0 ) $ 4.5 $ (5.5 ) Investments 1.8 3.9 5.7 12.9 (0.7 ) 12.2 7.7 (9.7 ) (2.0 ) 0.7 (5.5 ) (4.8 ) 1.4 (2.0 ) (0.6 ) 6.9 (11.1 ) (4.2 ) Indemnification assets 2.9 (1.2 ) 1.7 7.1 (13.5 ) (6.4 ) Total earning assets $ 13.2 $ (10.3 ) $ 2.9 $ 17.6 $ (26.3 ) $ (8.7 ) Interest-bearing deposits $ 1.5 $ 3.5 $ 5.0 $ (7.5 ) $ 10.6 $ 3.1 3.7 3.1 6.8 (34.4 ) 48.7 14.3 Total interest-bearing liabilities $ 5.2 $ 6.6 $ 11.8 $ (41.9 ) $ 59.3 $ 17.4 Average rates are impacted by purchase accounting accretion and amortization.(2)The balance and rate presented is calculated net of average credit balances for factoring clients(3)Non-accrual loans and related income are included in the respective categories.(4)Operating lease rental income is a significant source of revenue; therefore, we have presented the rental revenues net of depreciation and net of maintenance and other operating lease expenses.(5)Average borrowings reflects $10.6 billion of total outstanding unsecured borrowings. The average balance includes unsecured debt used to fund the Commercial Air leasing business, which is in discontinued operations. The interest expense presented represents only the interest expense of continuing operations, and excludes interest expense of discontinued operation. Upon completion of the redemption and tender offer for an aggregate of $5.8 billion of unsecured debt in the second quarter of 2017, the average rate will increase, because the average balance will decrease, but the interest expense will remain substantially the same.Item 2. Management’s Discussion(1)...(4) See footnotes to prior table.Analysis andItem 3.Quantitative and Qualitative Disclosures about Market Risk 57Revenues from loans were downprior quarters included a $9 million benefit from the prior year quarter, mainly reflecting lower asset balances and lower purchase accounting accretion resulting from the fair value discount on earningsuspension of depreciation expense related to NACCO because its assets recorded. (The impact of purchase accounting accretion on interest income and interest expense is displayedare included in a table below.) The decline fromassets held for sale. Excluding noteworthy items, NFR was $381 million, compared to $391 million in the prior quarter, was alsoas lower PAA and higher deposit and borrowing costs were partially offset by higher interest income on loans and investments. Higher borrowing costs were driven by lower benefit from loan prepayments. The declinethe unsecured debt issuance and higher deposit rates paid, as discussed further below. NFR in the revenues on the operating lease portfolio was duecurrent quarter included $2 million related to the rail portfolio, as discussed latertiming mismatch between the unsecured debt issuance in March 2018 and the section. deposits and investments are indicative of the generally low interest rate environmentenvironment. The average balance and while such revenues increased, they were not a primary driver of earnings. Revenues on investments have grown as we have increased the Bank’s liquidity investment securitiesin investments, reflecting our strategy to grow that portfolio. The returns willmay fluctuate depending on the composition of the investments.investments, interest rates and credit spreads. Interest expense was up in the current quarter, reflecting higher balances.Average earning assetsas we completed sales of Non-Strategic Portfolios during 2016, repositioned certain Commercial Finance portfolios in Commercial Banking, and experienced run-off of the LCM portfolio in Consumer Banking.The yield on AEA of 4.97% was down from the year-ago and prior quarters, reflecting lower purchase accounting accretion, and lower operating lease yields on our rail portfolio, driven by lower utilization of certain rail car types related to the energy sector and lower renewal rates.The decrease in average interest bearing liabilities reflects the reduced funding requirements ofreflected the lower asset levels. The overall rate as a percentage of AEA declined due to the higher percentage of AEA being funded by deposits as displayedcash balance in the following table, along with a higher mix of low cost deposits. Interest expense declined slightly in each of the quarters reflecting accretion of purchase accounting adjustments on borrowings and deposits. The interest expense on borrowings decreased during the quarter due to the termination of the CFL TRS in January 2017.Corporate.Funding Mix March 31,
2017 December 31,
2016 March 31,
2016Deposits 69 % 68 % 67 % Unsecured 22 % 23 % 22 % Secured Borrowings: Structured financings 4 % 4 % 5 % FHLB Advances 5 % 5 % 6 % Average Funding Mix Quarters Ended March 31,
2018 December 31,
2017 March 31,
2017Deposits 77 % 77 % 69 % Unsecured 10 % 10 % 22 % Secured Borrowings: Structured financings 4 % 4 % 4 % FHLB Advances 9 % 9 % 5 % Upon completionThe change from the year-ago quarter reflects the reduction of the earlyunsecured debt, including redemptions and tender offer disclosed inNote 16 — Subsequent Events inItem 1. Consolidated Financial Statements in April 2017, the funding mix will change. Pro forma for these liability management actions at March 31, 2017, deposits increase to 78% of total funding, while unsecured and secured debt represent 12% and 10%, respectively.totaling $6.9 billion during 2017.Due to the timing of the liability management actions, debt tender and redemptions, and the return of capital via the share repurchases, we expect some negative carry of approximately $20-$25 million in the second quarter. In addition, the repayment of the borrowings, which were redeemed and tendered, will have an insignificant impact on interest expense in continuing operations in future periods, as the interest expense allocated to discontinued operations included amounts representative of interest expense associated with these repaid borrowings.58 INC
INC. 45Interest-Bearing Deposits and Borrowings — Average Balances and Rates for the Quarters Ended (dollars in millions) Quarter Ended March 31, 2017 Quarter Ended December 31, 2016 Quarter Ended March 31, 2016 Average
Balance Interest
Expense Rate % Average
Balance Interest
Expense Rate % Average
Balance Interest
Expense Rate % CDs $ 16,454.2 $ 64.6 1.57 % $ 17,250.8 $ 68.5 1.59 % $ 18,341.8 $ 73.6 1.61 % Interest-bearing checking 3,197.0 4.2 0.53 % 3,101.0 4.6 0.59 % 3,069.1 4.0 0.52 % Savings 4,499.7 10.7 0.95 % 4,301.9 9.6 0.89 % 4,801.1 10.9 0.91 % Money markets / sweeps 6,802.1 14.5 0.85 % 6,485.3 13.7 0.84 % 5,617.1 11.0 0.78 % 30,953.0 94.0 1.21 % 31,139.0 96.4 1.24 % 31,829.1 99.5 1.25 % Unsecured notes 10,599.8 137.4 5.19 % 10,597.0 140.1 5.29 % 10,615.5 138.0 5.20 % Secured borrowings 2,987.1 23.7 3.17 % 3,826.3 34.8 3.64 % 4,899.8 47.7 3.89 % FHLB advances 2,410.7 6.4 1.06 % 2,424.5 5.5 0.91 % 3,116.9 4.2 0.54 % Total borrowings 15,997.6 167.5 4.19 % 16,847.8 180.4 4.28 % 18,632.2 189.9 4.08 % Allocated to discontinued operations (1,182.6 ) (98.4 ) (2,171.3 ) (98.5 ) (2,498.2 ) (94.4 ) 14,815.0 69.1 1.87 % 14,676.5 81.9 2.23 % 16,134.0 95.5 2.37 % Total interest-bearing liabilities $ 45,768.0 $ 163.1 1.43 % $ 45,815.5 $ 178.3 1.56 % $ 47,963.1 $ 195.0 1.63 % Total Deposits — Average Balances and Rates for the Quarters Ended (dollars in millions) March 31, 2018 December 31, 2017 March 31, 2017 Average
Balance Interest
Expense Rate % Average
Balance Interest
Expense Rate % Average
Balance Interest
Expense Rate % Interest-bearing Deposits Time deposits $ 14,140.2 $ 59.8 1.69 % $ 14,449.8 $ 61.2 1.69 % $ 16,454.2 $ 64.3 1.56 % Interest-bearing checking 2,658.7 4.1 0.62 % 2,637.8 3.7 0.56 % 3,197.0 4.4 0.55 % Savings 6,512.1 21.1 1.30 % 6,003.6 16.8 1.12 % 4,499.7 10.7 0.95 % Money markets / sweeps 5,284.2 12.1 0.92 % 5,042.5 10.4 0.82 % 6,802.1 14.6 0.86 % Total interest-bearing deposits 28,595.2 97.1 1.36 % 28,133.7 92.1 1.31 % 30,953.0 94.0 1.21 % Borrowings 4,092.3 51.0 4.98 % 3,745.9 46.7 4.99 % 10,599.8 136.8 5.16 % Secured borrowings 1,756.5 16.4 3.73 % 1,881.3 16.3 3.47 % 2,948.9 27.0 3.66 % FHLB advances 3,454.1 15.0 1.74 % 3,283.0 11.9 1.45 % 2,410.7 6.4 1.06 % — 4.1 — % — 5.0 — % — (2.7 ) — % Total borrowings 9,302.9 86.5 3.72 % 8,910.2 79.9 3.59 % 15,959.4 167.5 4.20 % Allocated to discontinued operations (257.5 ) (3.1 ) (279.1 ) (3.3 ) (1,144.4 ) (98.4 ) Total borrowings 9,045.4 83.4 3.69 % 8,631.1 76.6 3.55 % 14,815.0 69.1 1.87 % Total interest-bearing liabilities $ 37,640.6 $ 180.5 1.92 % $ 36,764.8 $ 168.7 1.84 % $ 45,768.0 $ 163.1 1.43 % March 31, 2017 December 31, 2016 March 31, 2016 Average
Balance Interest
Expense Average
Rate (%) Average
Balance Interest
Expense Average
Rate (%) Average
Balance Interest
Expense Average Interest-bearing deposits $ 30,953.0 $ 94.0 1.21 % $ 31,139.0 $ 96.4 1.24 % 31,829.1 99.5 1.25 % Non-interest-bearing deposits 1,387.3 – – 1,295.0 – – 1,062.4 – – Total deposits $ 32,340.3 $ 94.0 1.16 % $ 32,434.0 $ 96.4 1.19 % 32,891.5 99.5 1.21 % Excludes certain deposits such as escrow accounts, security deposits,The March 31, 2018 quarter includes amounts applicable to $1.0 billion of senior unsecured debt and other similar accounts, therefore, totals may differ from other average balances included in this document.$400 million of unsecured subordinated debt issued during the quarter.Average borrowings reflects $10.6 billion of total outstanding unsecured borrowings. The average balanceBalance includes unsecured debt used to fund the Commercial Air leasing business, which is in discontinued operations. The interest expense presented represents onlyrelated to facility fees and amortization of deferred costs on unused portions of credit facilities, including the Revolving Credit Facility and total return swaps. Amount for the quarter ended March 31, 2017, was reduced by capitalized interest expense of continuing operations,on aircraft pre-delivery deposits and excludes interest expense of discontinued operation. Upon completion of the redemption and tender offer for an aggregate of $5.8 billion of unsecured debtincluded in the second quarter of 2017, the average rate will increase, because the average balance will decrease, but the interest expense will remain substantially the same.amount allocated to discontinued operations.Item 2. Management’s DiscussionWe remain focused on improving the mix of deposits. The change in mix of our deposits reflects our strategy to increase the percentage of non-maturity deposits relative to total deposits. As a result of our strategy, the table above reflects increased savings deposits compared to both the year-ago and Analysisprior quarters. Compared to the year-ago quarter, we decreased money market andItem 3.Quantitative time deposit accounts in the higher cost commercial channel. In addition, we significantly lessened sweep accounts, and Qualitative Disclosures about Market Risk 59
time deposits in the brokered channel. The deposit cost increases from the year-ago and prior quarters also reflected the impact from the Federal Reserve increases in the short-term interest rate. The Federal Reserve raised rates by 0.25% in March, June and December 2017 and again in March 2018. See Funding and Liquidity section for a table that reflects deposits by channel. Borrowing costs increased compared to the prior quarter as we issued $1 billion of senior unsecured notes at a weighted average coupon rate of 4.69%. In addition, we issued $400 million of unsecured subordinated debt at 6.125% in conjunction with our capital plan that will allow us to return up to $800 million of capital. Most of the proceeds of the senior unsecured borrowings were used to repay $883 million of unsecured notes in April. March 31, 2018 December 31, 2017 March 31, 2017 Average
Balance Interest
Expense Average
Rate (%) Average
Balance Interest
Expense Average
Rate (%) Average
Balance Interest
Expense Average Interest-bearing deposits $ 28,595.2 $ 97.1 1.36 % $ 28,133.7 $ 92.1 1.31 % $ 30,953.0 $ 94.0 1.21 % Non-interest-bearing deposits 1,456.1 — — 1,501.3 — — 1,387.3 — — Total deposits $ 30,051.3 $ 97.1 1.29 % $ 29,635.0 $ 92.1 1.24 % $ 32,340.3 $ 94.0 1.16 % SeeSelect Financial Data (Average Balances) section for more information on borrowing rates.margin relatedmargin-related data for our segments and divisions within the segments.Segment Average Yield and Other Data (dollars in millions) Quarters Ended March 31,
2017 December 31,
2016 March 31,
2016AEA $ 29,304.7 $ 29,504.7 $ 29,966.6 NFR 311.7 320.0 343.8 Gross yield 7.63 % 7.78 % 7.80 % NFM 4.25 % 4.34 % 4.59 % Commercial Finance $ 10,216.9 $ 10,646.6 $ 11,891.8 Rail 7,320.0 7,286.7 6,882.4 Real Estate Finance 5,565.4 5,501.8 5,345.4 Business Capital 6,202.4 6,069.6 5,847.0 Commercial Finance 5.16 % 5.54 % 5.17 % Rail 11.98 % 12.22 % 13.73 % Real Estate Finance 4.90 % 5.24 % 5.44 % Business Capital 9.01 % 8.71 % 8.32 % Commercial Finance $ 97.8 $ 110.4 $ 113.5 Rail 81.8 78.1 100.2 Real Estate Finance 48.2 52.2 54.5 Business Capital 83.9 79.3 75.6 Commercial Finance 3.83 % 4.15 % 3.82 % Rail 4.47 % 4.29 % 5.82 % Real Estate Finance 3.46 % 3.80 % 4.08 % Business Capital 5.41 % 5.23 % 5.17 % 60 CIT GROUP INC Quarters Ended Quarters Ended March 31,
2018 December 31,
2017 March 31,
2017 March 31,
2018 December 31,
2017 March 31,
2017Commercial Banking Consumer Banking AEA $ 30,021.7 $ 29,507.3 $ 29,304.7 AEA $ 7,009.4 $ 6,885.6 $ 7,291.8 NFR 278.4 296.1 311.7 NFR 109.5 104.0 106.5 Gross yield 7.57 % 7.69 % 7.63 % Gross yield 4.86 % 4.90 % 5.49 % NFM 3.71 % 4.01 % 4.25 % NFM 6.25 % 6.04 % 5.84 % AEA AEA Commercial Finance $ 10,132.5 $ 9,748.6 $ 10,216.9 Other Consumer Banking $ 2,747.0 $ 2,452.7 $ 2,165.9 Rail 7,695.1 7,583.2 7,320.0 LCM 4,262.4 4,432.9 5,125.9 Real Estate Finance 5,616.2 5,615.0 5,565.4 Gross yield Business Capital 6,577.9 6,560.5 6,202.4 Other Consumer Banking 3.53 % 3.52 % 3.46 % Gross yield LCM 5.73 % 5.66 % 6.34 % Commercial Finance 5.30 % 5.61 % 5.16 % NFR Rail 11.02 % 11.25 % 11.98 % Other Consumer Banking $ 70.6 $ 62.4 $ 46.6 Real Estate Finance 5.36 % 5.18 % 4.90 % LCM 38.9 41.6 59.9 Business Capital 8.94 % 8.79 % 9.01 % NFM NFR Other Consumer Banking 10.28 % 10.18 % 8.61 % Commercial Finance $ 86.1 $ 96.1 $ 97.8 LCM 3.65 % 3.75 % 4.67 % Rail 70.0 78.5 81.8 Real Estate Finance 46.7 48.2 48.2 Non-Strategic Portfolios Business Capital 75.6 73.3 83.9 AEA $ 148.6 $ 188.0 $ 367.5 NFM NFR 0.7 2.9 2.0 Commercial Finance 3.40 % 3.94 % 3.83 % Gross yield 6.46 % 10.85 % 7.62 % Rail 3.64 % 4.14 % 4.47 % NFM 1.88 % 6.17 % 2.18 % Real Estate Finance 3.33 % 3.43 % 3.46 % Business Capital 4.60 % 4.47 % 5.41 % Segment Average Yield and Other Data (dollars in millions) (continued) Quarters Ended March 31,
2017 December 31,
2016 March 31,
2016AEA $ 7,291.8 $ 7,457.8 $ 7,588.7 NFR 106.5 110.5 97.3 Gross yield 5.49 % 5.73 % 5.55 % NFM 5.84 % 5.93 % 5.13 % Other Consumer Banking $ 2,165.9 $ 2,153.5 $ 1,782.6 Legacy Consumer Mortgages 5,125.9 5,304.3 5,806.1 Other Consumer Banking 3.46 % 3.70 % 3.69 % Legacy Consumer Mortgages 6.34 % 6.56 % 6.12 % Other Consumer Banking $ 46.6 $ 46.6 $ 33.7 Legacy Consumer Mortgages 59.9 63.9 63.6 Other Consumer Banking 8.61 % 8.66 % 7.56 % Legacy Consumer Mortgages 4.67 % 4.82 % 4.38 % AEA $ 367.5 $ 625.6 $ 1,515.6 NFR 2.0 3.7 14.4 Gross yield 7.62 % 6.39 % 7.63 % NFM 2.18 % 2.37 % 3.80 % boththe year-ago and prior quarters. The Commercial Finance increase in gross yields from the year-ago quarter was primarily driven by the benefit of higher short-term interest rates, partially offset by a decline in PAA, which, in addition to lower prepayment benefits, also drove the division’s decrease from the prior quarter. Gross yields in Rail were lower from the year-ago and prior quarters, reflectingas lease rates continued to re-price lower on average across the North American portfolio. The Real Estate Finance gross yield improved from the year-ago and prior quarters, driven by the benefit of higher short term interest rates that more than offset lower purchase accounting accretion in Commercial Finance and Real Estate Finance and lower prepayment benefits in Commercial Finance, which masked the impact of higher LIBOR rates, as well as lower renewal rates in the Rail division. These offset higheraccretion. Gross yields in Business Capital.Capital were down slightly from the year-ago quarter, and up from the prior quarter due to asset mix and the interest rate increase.impactedfrom the year-ago quarter, as the decline in LCM offset a modest increase in Other Consumer Banking. The decline in gross yields in LCM was driven by lower purchase accounting accretion on mortgage loans in LCM, lower LCM portfoliosome of which was due to run-offceasing PAA accretion related to the reverse mortgages that were transferred to assets held for sale (" AHFS") at the end of the third quarter of 2017. The decline also reflects higher amounts of negative interest income associated with amortizing the indemnification asset. The negative interest income on the indemnification asset totaled $14 million this higher-yielding portfolio,quarter, $16 million last quarter and growth$8 million in the year ago quarter. The negative amounts reduce interest income and are due to lower expected reimbursable losses under the loss share agreement, reflecting better than expected credit performance of the covered loans. While we expect the yield to remain negative, the level can increase or decrease as the indemnification assets amortizes over the remaining contract period, which expires in March 2019. NFM in Consumer Banking is higher than gross yields as this segment receives credit from the other mortgage loans, which carry lower yields.segments for the value of the deposits generated.2017,2018, the remaining accretable mark is $1.1 billion,PAA was $700 million, of which approximately $150$86 million relatesrelated to Commercial Banking about halfand $614 million related to Consumer Banking. This compares to $733 million of remaining accretable PAA as of December 31, 2017, of which is expected$97 million related to Commercial Banking and $636 million related to Consumer Banking. We are forecasting 40-50% of the remaining accretable PAA in Commercial Banking to be realized in the next year. However, when a loan prepays, the loan’s remaining PAA is accelerated into interest income, which could result in fluctuations from quarter to quarter (see footnote one to the following table).four quarters. The remaining $950 million relates toaccretable PAA in Consumer Banking and is runningexpected to run off at a rate consistent with the run offrun-off of the underlying mortgages.mortgages, which has averaged 10-15% annually. However, amounts may vary quarter to quarter from fluctuations in prepayments, which results in a loan's remaining PAA to be accelerated into interest income. (See footnote 1 to the following table).Item 2. Management’s Discussion and Analysis andItem 3.Quantitative and Qualitative Disclosures about Market Risk 61
CIT GROUP INC. 47 accretion by segment and division for both interest income and interest expense.Purchase Accounting Accretion (PAA) (dollars in millions) Quarters Ended Quarters Ended March 31, 2017 December 31, 2016 March 31, 2016 March 31, 2018 December 31, 2017 March 31, 2017 PAA Accretion Recognized in: PAA Accretion Recognized in: PAA Accretion Recognized in: PAA Accretion Recognized in: PAA Accretion Recognized in: PAA Accretion Recognized in: Interest
Income(1) Interest
Expense(2) NFR Interest
Income(1) Interest
Expense(2) NFR Interest
Income(1) Interest
Expense(2) NFR
Income(1) NFR
Income(1) NFR
Income(1) NFR Commercial Finance $ 12.2 $ 0.3 $ 12.5 $ 18.1 $ 0.3 $ 18.4 $ 18.8 $ 0.9 $ 19.7 $ 4.0 $ 0.1 $ 4.1 $ 7.8 $ 0.2 $ 8.0 $ 12.2 $ 0.3 $ 12.5 Real Estate Finance 11.9 – 11.9 16.7 – 16.7 19.7 – 19.7 6.6 — 6.6 7.9 — 7.9 11.9 — 11.9 Total Commercial Banking 24.1 0.3 24.4 34.8 0.3 35.1 38.5 0.9 39.4 10.6 0.1 10.7 15.7 0.2 15.9 24.1 0.3 24.4 Other Consumer Banking (0.4 ) 1.2 0.8 1.7 1.6 3.3 0.6 3.2 3.8 0.1 0.8 0.9 0.1 0.9 1.0 (0.4 ) 1.2 0.8 Legacy Consumer Mortgages 30.7 – 30.7 35.0 – 35.0 30.0 – 30.0 21.0 — 21.0 23.0 — 23.0 30.7 — 30.7 Total Consumer Banking 30.3 1.2 31.5 36.7 1.6 38.3 30.6 3.2 33.8 21.1 0.8 21.9 23.1 0.9 24.0 30.3 1.2 31.5 – 0.2 0.2 – 0.4 0.4 – 1.4 1.4 — — — — — — — 0.2 0.2 $ 54.4 $ 1.7 $ 56.1 $ 71.5 $ 2.3 $ 73.8 $ 69.1 $ 5.5 $ 74.6 $ 31.7 $ 0.9 $ 32.6 $ 38.8 $ 1.1 $ 39.9 $ 54.4 $ 1.7 $ 56.1 Included in the above are accelerated recognition of approximately $12.3$7.1 million, $16.4$12.1 million and $23.5$14.2 million for the quarters ended March 31, 20172018 and 20162017 and December 31, 2016,2017, respectively.Debt and deposits acquired in the OneWest Bank acquisition were recorded at a net premium, therefore the purchase accounting accretion of that adjustment decreases interest expense. The decline from the year-ago quarter reflects the transfer of the reverse mortgage portfolio to AHFS at the end of the third quarter of 2017. Net Operating Lease Data (dollars in millions) Quarters Ended March 31, 2017 December 31, 2016 March 31, 2016 Rental income on operating leases $ 251.3 13.40 % $ 252.2 13.59 % $ 264.1 15.22 % Depreciation on operating lease equipment (73.5 ) (3.92 )% (69.8 ) (3.76 )% (61.3 ) (3.53 )% Maintenance and other operating lease expenses (53.8 ) (2.87 )% (57.5 ) (3.10 )% (48.9 ) (2.82 )% Net operating lease revenue and % $ 124.0 6.61 % $ 124.9 6.73 % $ 153.9 8.87 % Average Operating Lease Equipment (“AOL”) $ 7,500.7 $ 7,425.6 $ 6,940.4 Quarters Ended March 31, 2018 December 31, 2017 March 31, 2017 Rental income on operating leases $ 253.6 12.78 % $ 252.6 12.89 % $ 251.3 13.40 % Depreciation on operating lease equipment 76.4 3.85 % 74.3 3.79 % 73.5 3.92 % Maintenance and other operating lease expenses 57.4 2.89 % 57.9 2.95 % 53.8 2.87 % Net operating lease revenue and % $ 119.8 6.04 % $ 120.4 6.14 % $ 124.0 6.61 % Average operating lease equipment, including amounts held for sale $ 7,934.6 $ 7,841.0 $ 7,500.9 generateda component of NFR, is driven principally by the performance of the Rail withportfolio within the remaining amount from Business Capital, both divisions of Commercial Banking.Banking segment. Net operating lease revenue was flat with the prior quarter and down asfrom the benefit from growth in the portfolio was offset byyear-ago quarter, reflecting continued downward pressures on renewal rates in Rail.Rail, partially offset by increased utilization. Net operating lease revenue benefited in the current and prior quarters (none in the year-ago quarter) from suspended depreciation of about $9 million in each period, related to the pending sale of our European Rail business, NACCO. Increasing the depreciation in the current and prior quarters for the amount suspended would have decreased the respective net operating lease revenue in each period, and the rates to 5.57% for the current quarter and 5.69% for the prior quarter, respectively. Suspended depreciation is discussed further below.Railcarwas flatimproved to nearly 97% from 96% at 94% from December 31, 20162017, primarily driven by improvements in tank, mill gondola and prior-yearbox car utilization. Rail lease rates in the current quarter continued to price down compared to the rates on expiring leases, reflecting excess capacity in the market. We continue to expect downward pressure, and anticipate re-pricing to be down 20%-30% on average through the rest of 2018 and into 2019, reflecting continued pressures in demandpressure from tank car lease rates, which are coming due for cars that transport crude, coal and steel. We expect these pressures to continue during 2017, with rental rates to continue to re-price downward as leases renew.renewal at a faster pace.WhileDepreciation was up from the total amount of depreciation is up due to portfolio growth, the increase in rate wasyear-ago and prior quarters driven primarily by theasset growth in the non-rail portfolio, equipment which is depreciated over a shorter time span.timespan. Once a long-lived asset is classified as assets held for sale, depreciation expense is no longer recognized, and the asset is evaluated for impairment with any such charge recorded in other income, of which none was recorded in the quarter on these assets. Consequently, net operating lease revenue includes rental income on operating lease equipment classified as assets held for sale, but there is no related depreciation expense. Suspended depreciation on operating lease equipment in assets held for sale totaled $9 million for the current and prior quarters, with none in the year-ago quarter. The 2018 second quarter is expected to have suspended depreciation at a similar level. See“Expenses — Depreciation on operating lease equipment” and “Concentrations — Operating Leases” for additional information.railRail portfolio. The increase from the prior-yearyear-ago quarter reflected increased maintenance, freight and storage costs in Rail due to the higher number of railcars off-lease, and growth in the portfolio. The decrease from the prior quarter reflects the impact of higher prior quarter expenses from fleet movement related to lease returnsyear-end deadlines.Upon emergence from bankruptcy in 2009, CIT applied Fresh Start Accounting (“FSA”) in accordance with GAAP. The most significant remaining discount at March 31, 2017, related to operating lease equipment ($1.2 billion related to rail operating lease equipment). The discount on the operating lease equipment was, in effect, an impairment of the operating lease equipment upon emergence from bankruptcy, as the assets were recorded at their fair value, which was less than their carrying value. The recording of the FSA adjustment reduced the asset balances subject to depreciationAnalysis and thus decreases depreciation expense over the remaining useful life of the operating lease equipment or until it is sold.Item 3. Quantitative and Qualitative Disclosures about Market Risk62 CIT GROUP INCCreditThe following provides information on certain credit metrics, remain stableincluding non-accrual loan and continuenet charge-off levels, as well as the provision for credit losses and allowance for loan losses, that management uses to reflect a favorabletrack the credit environment, with no substantive changes in credit trends.quality of the portfolio.$259loans), compared to $221 million (0.87% of finance receivables) decreased from $279 million (0.94%(0.76%) at December 31, 2016, driven by lower balances in the Commercial Banking segment related to the maritime, energy2017, and real estate portfolios. Compared to the year-ago quarter, the decrease was driven by the decline in balances in NSP.$259 million (0.87%) at March 31, 2017.$50$69 million, up from the prior quarter provision of $37$30 million and down from the prior year quarter provision of $90 million. The increase from the prior quarter was$50 million, primarily driven byreflecting a specific reserve on$22 million charge-off of a single retail account incommercial exposure and a higher level of reserves within the Business Capital factoring business. The prior year quarter included an increase in reserves related to energy and maritime portfolios.Commercial Finance division of Commercial Banking.$28$50 million (0.37%(0.68% of average finance receivables (“AFR”))loans) in the current quarter, $24up from $18 million (0.32%(0.26%) in the prior quarter and $32from $28 million (0.42%(0.37%) in the year-ago quarter. RecoveriesThe increase was driven by the $22 million charge-off noted above. Excluding that charge-off, net charge-offs in the current quarter were $28 million (0.39% of $6 million were down from the prior quarter and relatively flat from the year-ago quarter. Net charge-offs are presented in a table and discussed later in this section.average loans).Allowance for Loan Losses (dollars in millions) Quarters Ended Quarters Ended March 31,
2017 December 31,
2016 March 31,
2016March 31,
2018 December 31,
2017 March 31,
2017 $ 432.6 $ 415.0 $ 346.9 $ 431.1 $ 419.5 $ 432.6 49.7 36.7 89.5 68.8 30.4 49.7 (6.2 ) 4.6 (3.6 ) (2.4 ) (0.5 ) (6.2 ) Net additions 43.5 41.3 85.9 66.4 29.9 43.5 Gross charge-offs (33.0 ) (32.9 ) (36.8 ) (55.1 ) (23.3 ) (33.0 ) Recoveries 5.5 9.2 4.8 5.2 5.0 5.5 Net Charge-offs (27.5 ) (23.7 ) (32.0 ) (49.9 ) (18.3 ) (27.5 ) $ 448.6 $ 432.6 $ 400.8 $ 447.6 $ 431.1 $ 448.6 Provision for credit losses Specific reserves on impaired loans $ 9.6 $ 11.9 $ 13.7 $ (0.7 ) $ (9.6 ) $ 9.6 Non-specific reserves 40.1 24.8 75.8 69.5 40.0 40.1 Total $ 49.7 $ 36.7 $ 89.5 $ 68.8 $ 30.4 $ 49.7 Allowance for loan losses Specific reserves on impaired loans $ 39.5 $ 33.7 $ 40.2 $ 25.3 $ 26.0 $ 39.5 Non-specific reserves 409.1 398.9 360.6 422.3 405.1 409.1 Total $ 448.6 $ 432.6 $ 400.8 $ 447.6 $ 431.1 $ 448.6 Ratio Allowance for loan losses as a percentage of total loans 1.51 % 1.46 % 1.30 % 1.52 % 1.48 % 1.51 % Allowance for loan losses as a percent of finance receivable/Commercial 1.85 % 1.81 % 1.62 % Allowance for loan losses plus principal loss discount as a percent of finance receivables (before the principal loss discount)/Commercial 1.97 % 1.97 % 1.89 % Allowance for loan losses plus principal loss discount as a percent of finance receivables (before the principal loss discount)/Consumer 5.72 % 6.05 % 7.87 % Allowance for loan losses as a percent of loans/Commercial 1.79 % 1.74 % 1.85 % The provision for credit losses includes amounts related to reserves on unfunded loan commitments and letters of credit, and for deferred purchase agreements, which are reflected in Other Liabilities.other liabilities. The items included in other liabilities totaled $50$47 million, $44$45 million and $48$50 million at March 31, 2017,2018, December 31, 20162017 and March 31, 2016,2017, respectively. “Other” also includes allowance for loan losses associated with loan sales and foreign currency translations.Item 2. Management’s Discussion and Analysis andItem 3.Quantitative and Qualitative Disclosures about Market Risk 63finance receivables,loans, 1.76% excluding loans subject to loss sharing agreements with the FDIC) at March 31, 2017, compared to $433 million (1.46% of finance receivables, 1.72% excluding loans subject to loss sharing agreements with the FDIC) at December 31, 2016 and $401 million (1.30% of finance receivables, 1.53% excluding loans subject to loss sharing agreements with the FDIC) at March 31, 2016.2017. The changesincrease in the allowance for loan losses from the prior quarter andreflected a higher level of reserves, primarily within the Commercial Finance division of Commercial Banking. The decrease in the Commercial Banking allowance ratio from the year-ago quarter reflectreflects the itemscharge-off of previously mentioned discussing the provision for credit losses.Including the impact of the principal loss discountestablished specific reserves on credit impaired loans, which is essentially a reserve for credit losses on the discounted loans, the commercial loan allowance to finance receivables was 1.97%, unchanged from December 31, 2016 and 1.89% at March 31, 2016. The consumer loans ratio was 5.72% at March 31, 2017 compared to 6.05% at December 31, 2016 and 7.87% at March 31, 2016, as most of the consumer loans purchased were credit impaired and are partially covered by loss sharing agreements with the FDIC. The decrease was drivenoffset by the shiftincrease in asset mix as new originations offset the run-offallowance for loan losses for reserve build.Loan Net Carrying Value (dollars in millions) Finance
Receivables Allowance
for Loan
Losses Net Carrying
ValueCommercial Banking $ 22,878.6 $ (424.0 ) $ 22,454.6 Consumer Banking 6,812.8 (24.6 ) 6,788.2 Total $ 29,691.4 $ (448.6 ) $ 29,242.8 Commercial Banking $ 22,562.3 $ (408.4 ) $ 22,153.9 Consumer Banking 6,973.6 (24.2 ) 6,949.4 Total $ 29,535.9 $ (432.6 ) $ 29,103.3 Loans Allowance
for Loan
Losses Net Carrying
ValueMarch 31, 2018 Commercial Banking $ 23,345.9 $ (417.2 ) $ 22,928.7 Consumer Banking 6,107.7 (30.4 ) 6,077.3 Total $ 29,453.6 $ (447.6 ) $ 29,006.0 December 31, 2017 Commercial Banking $ 23,159.3 $ (402.2 ) $ 22,757.1 Consumer Banking 5,954.6 (28.9 ) 5,925.7 Total $ 29,113.9 $ (431.1 ) $ 28,682.8 Net Charge-offs (dollars in millions) Quarters Ended March 31, 2017 December 31, 2016 March 31, 2016 Commercial Finance $ 10.6 0.43 % $ 17.8 0.69 % $ 16.4 0.57 % Real Estate Finance 3.9 0.28 % – – 1.5 0.11 % Business Capital 17.9 0.99 % 14.2 0.82 % 18.2 1.11 % 32.4 0.57 % 32.0 0.56 % 36.1 0.61 % Legacy Consumer Mortgages 0.6 0.03 % 0.9 0.05 % 0.7 0.04 % 0.6 0.03 % 0.9 0.05 % 0.7 0.04 % Total $ 33.0 0.45 % $ 32.9 0.44 % $ 36.8 0.48 % Commercial Finance $ 0.1 – $ 0.7 0.02 % $ 0.5 0.02 % Business Capital 4.9 0.27 % 7.9 0.45 % 3.5 0.22 % 5.0 0.09 % 8.6 0.15 % 4.0 0.06 % Legacy Consumer Mortgages 0.5 0.02 % 0.6 0.03 % 0.8 0.05 % 0.5 0.02 % 0.6 0.03 % 0.8 0.05 % Total $ 5.5 0.08 % $ 9.2 0.12 % $ 4.8 0.06 % Commercial Finance $ 10.5 0.43 % $ 17.1 0.67 % $ 15.9 0.55 % Real Estate Finance 3.9 0.28 % – – 1.5 0.28 % Business Capital 13.0 0.72 % 6.3 0.37 % 14.7 0.89 % 27.4 0.48 % 23.4 0.41 % 32.1 0.55 % Legacy Consumer Mortgages 0.1 0.01 % 0.3 0.02 % (0.1 ) (0.01 )% 0.1 0.01 % 0.3 0.02 % (0.1 ) (0.01 )% Total $ 27.5 0.37 % $ 23.7 0.32 % $ 32.0 0.42 % 64 CIT GROUP INC Quarters Ended March 31, 2018 December 31, 2017 March 31, 2017 Gross Charge-offs Commercial Finance $ 40.0 1.61 % $ 8.2 0.34 % $ 10.6 0.43 % Real Estate Finance — — % 0.2 0.02 % 3.9 0.28 % Business Capital 14.6 0.77 % 14.4 0.76 % 17.9 0.99 % Commercial Banking 54.6 0.94 % 22.8 0.40 % 32.4 0.57 % Legacy Consumer Mortgages 0.5 0.06 % 0.5 0.06 % 0.6 0.03 % Consumer Banking 0.5 0.03 % 0.5 0.03 % 0.6 0.03 % Total $ 55.1 0.75 % $ 23.3 0.32 % $ 33.0 0.45 % Recoveries Commercial Finance $ 0.1 — % $ 0.3 0.01 % $ 0.1 — % Business Capital 4.7 0.25 % 4.5 0.24 % 4.9 0.27 % Commercial Banking 4.8 0.08 % 4.8 0.08 % 5.0 0.09 % Legacy Consumer Mortgages 0.4 0.04 % 0.2 0.03 % 0.5 0.02 % Consumer Banking 0.4 0.02 % 0.2 0.01 % 0.5 0.02 % Total $ 5.2 0.07 % $ 5.0 0.06 % $ 5.5 0.08 % Net Charge-offs Commercial Finance $ 39.9 1.61 % $ 7.9 0.33 % $ 10.5 0.43 % Real Estate Finance — — % 0.2 0.02 % 3.9 0.28 % Business Capital 9.9 0.52 % 9.9 0.52 % 13.0 0.72 % Commercial Banking 49.8 0.86 % 18.0 0.32 % 27.4 0.48 % Legacy Consumer Mortgages 0.1 0.02 % 0.3 0.03 % 0.1 0.01 % Consumer Banking 0.1 0.01 % 0.3 0.02 % 0.1 0.01 % Total $ 49.9 0.68 % $ 18.3 0.26 % $ 27.5 0.37 % increaseincreases in net charge-offs fromcompared to the year-ago and prior quarter was driven by higher charge-offs in Business Capital and Real Estate Finance. The declinequarters resulted primarily from a year ago quartercharge-off on a single account of $22 million, most of which was driven by lower charge-offs in the energy portfolio in Commercial Finance.related toin AHFS for each period, and when added to OREO and other repossessed assets, sums to non-performing assets. PCI loans are excluded from these tables as they are written down at acquisition to their fair value using an estimate of cashflows deemed to be collectible. Accordingly, such loans are no longer classified as past due or non-accrual even though they may be contractually past due, because we expect to fully collect the new carrying values of these loans.Non-accrual Loans (dollars in millions)(1)
50 Item 2. Management’s Discussion and Analysis and Item 3. Quantitative and Qualitative Disclosures about Market Risk March 31,
2017 December 31,
2016U.S. $ 218.9 $ 218.9 Foreign 39.9 59.7 Non-accrual loans $ 258.8 $ 278.6 U.S. $ 42.3 $ 41.7 Foreign 71.8 40.6 Restructured loans $ 114.1 $ 82.3 Accruing loans past due 90 days or more $ 26.5 $ 32.0 March 31,
2018 December 31,
2017Non-accrual loans U.S. $ 212.8 $ 211.1 Foreign 23.7 9.8 Non-accrual loans $ 236.5 $ 220.9 U.S. $ 94.4 $ 103.5 Restructured loans $ 94.4 $ 103.5 Accruing loans past due 90 days or more Accruing loans past due 90 days or more $ 27.0 $ 31.9 Factored receivables within our Business Capital division do not accrue interest and therefore are not considered within non-accrual loan balances howeverbut are considered for credit provisioning purposes.Excludes TDR loans in a trial modification period of $29.2$7.9 million and $39.5$12.5 million at March 31, 20172018 and December 31, 2016,2017, respectively. Refer toNote 3 — Loans for further details. March 31, 2017 December 31, 2016 Commercial Finance $ 169.4 1.76 % $ 188.8 1.90 % Real Estate Finance 3.7 0.06 % 20.4 0.37 % Business Capital 60.8 0.81 % 41.7 0.60 % 233.9 1.02 % 250.9 1.11 % Legacy Consumer Mortgages 15.9 0.34 % 17.3 0.36 % Other Consumer Banking 0.3 0.01 % 0.1 – 16.2 0.24 % 17.4 0.25 % 8.7 NM 10.3 NM $ 258.8 0.87 % $ 278.6 0.94 % March 31, 2018 December 31, 2017 Commercial Finance $ 153.2 1.54 % $ 134.8 1.36 % Real Estate Finance — — % 2.8 0.05 % Business Capital 45.6 0.59 % 53.2 0.70 % Commercial Banking 198.8 0.85 % 190.8 0.82 % Legacy Consumer Mortgages 25.2 0.79 % 19.9 0.60 % Other Consumer Banking 0.3 0.01 % 0.4 0.02 % Consumer Banking 25.5 0.42 % 20.3 0.34 % Non-Strategic Portfolios 12.2 NM 9.8 NM Total $ 236.5 0.80 % $ 220.9 0.76 % decreasedwere up from December 31, 20162017, primarily due to decreasesan increase in Commercial Finance and Real Estate Finance partially offset by an increasedecreases in Real Estate Finance and Business Capital.66%48% of our non-accrual accounts were paying currently compared to 75%52% at December 31, 2016.2017. Our impaired loan carrying value (including PAA discount specific reserves and charge-offs) to estimated outstanding unpaid principal balances approximated 95%67% compared to 91%76% at December 31, 2016.2017. For this purpose, impaired loans are comprisedcomprise principally of non-accrual loans over $500,000 and troubled debt restructurings (“TDRs”).1.1%1.8% of finance receivablesloans at March 31, 2017, essentially unchanged from2018 and 1.3% of loans at December 31, 2016.2017.Item 2. Management’s Discussion and Analysis andItem 3.Quantitative and Qualitative Disclosures about Market Risk 65Forgone Interest (dollars in millions) Quarters Ended March 31, 2017 2016 U.S. Foreign Total U.S. Foreign Total Interest revenue that would have been earned at original terms $ 5.9 $ 0.6 $ 6.5 $ 6.3 $ 2.2 $ 8.5 Less: Interest recorded (0.5 ) (0.1 ) (0.6 ) (0.8 ) (0.7 ) (1.5 ) Foregone interest revenue $ 5.4 $ 0.5 $ 5.9 $ 5.5 $ 1.5 $ 7.0 Quarters Ended March 31, 2018 2017 U.S. Foreign Total U.S. Foreign Total Interest revenue that would have been earned at original terms $ 8.0 $ 1.3 $ 9.3 $ 5.9 $ 0.6 $ 6.5 Less: Interest recorded (0.8 ) — (0.8 ) (0.5 ) (0.1 ) (0.6 ) Foregone interest revenue $ 7.2 $ 1.3 $ 8.5 $ 5.4 $ 0.5 $ 5.9 loans/finance receivablesloans in response to borrowers’ difficulties. Modifications that include a financial concession to the borrower, which otherwise would not have been considered, are accounted for as TDRs. For those accounts that were modified but were not considered to be TDRs, it was determined that no concessions had been granted by CIT to the borrower. Borrower compliance with the modified terms is the primary measurement that we use to determine the success of these programs.TDRs and Modifications (dollars in millions) March 31, 2017 December 31, 2016 March 31, 2018 December 31, 2017 %
Compliant %
Compliant % Compliant % Compliant Deferral of principal and/or interest $ 43.6 100 % $ 9.6 99 % $ 25.5 81 % $ 31.8 95 % Covenant relief and other 70.5 97 % 72.7 95 % 68.9 78 % 71.7 70 % Total TDRs $ 114.1 97 % $ 82.3 84 % $ 94.4 79 % $ 103.5 78 % Percent non-accrual 53 % 41 % 61 % 63 % Extended maturity $ 143.4 100 % $ 95.0 100 % $ 30.0 100 % $ 35.7 100 % Covenant relief 210.5 100 % 261.1 100 % 223.0 95 % 260.2 100 % Interest rate increase 143.0 89 % 138.2 100 % 154.3 100 % 102.8 100 % Other 168.8 100 % 216.0 92 % 332.2 98 % 229.5 90 % Total Modifications $ 665.7 $ 710.3 $ 739.5 $ 628.2 Percent non-accrual 14 % 23 % 10 % 8 % Excludes TDR loans in a trial modification period of $29.2$7.9 million and $39.5$12.5 million at March 31, 20172018 and December 31, 2016,2017, respectively. Refer toSee Note 3 — Loans for further details.Table depicts the predominant element of each modification, which may contain several of the characteristics listed. 66 CIT GROUP INCNon-interestnon-interest income is also discussed in each of the individual segments inResults By Business Segment. Certain line-items in the table have changed from previous disclosures, all prior periods are conformed.Non-interest Income (dollars in millions) Quarters Ended March 31,
2017 December 31,
2016 March 31,
2016Rental income on operating leases $ 251.3 $ 252.2 $ 264.1 Other Income: Fee revenues 28.9 26.8 30.3 Factoring commissions 26.1 25.7 26.4 Gains on sales of leasing equipment 8.5 10.5 4.8 Gains on loan and portfolio sales 4.8 22.9 0.3 Gains (losses) on investments 4.1 22.0 (4.1 ) Gains on OREO sales 1.3 1.5 1.7 Termination fees on Canadian total return swap – (280.8 ) – Impairment on assets held for sale (1.7 ) – (20.3 ) Net (losses) gains on derivatives and foreign currency exchange (11.3 ) 50.8 9.3 Other revenues 18.4 3.0 36.4 Total other income 79.1 (117.6 ) 84.8 Total non-interest income $ 330.4 $ 134.6 $ 348.9 Quarters Ended March 31,
2018 December 31,
2017 March 31,
2017Rental income on operating leases $ 253.6 $ 252.6 $ 251.3 Other non-interest income: Fee revenues 27.2 30.3 28.9 Factoring commissions 25.6 26.7 26.1 Gains on leasing equipment, net of impairments 13.5 7.9 6.9 BOLI Income 6.5 5.8 — Gains on investment securities, net of impairments 5.4 12.4 4.1 Other revenues 26.5 54.1 13.1 Total other non-interest income 104.7 137.2 79.1 $ 104.7 $ 107.8 $ 87.2 Total non-interest income $ 358.3 $ 389.8 $ 330.4 2016,2017, Note 6 — Operating Lease Equipment inItem 88. Financial Statements and Supplementary Data for information on operating leases., which include items generated by our business activities such as fees on lines and letters of credit, capital markets-related fees, agent and advisory fees and servicing fees, remained fairly steady andfees. Fee revenues were down from the prior quarter, primarily due to a decrease in capital markets fees. Fee revenues are mainly driven by our Commercial Banking segment.flat relativedown from the prior quarter, reflecting the seasonal decrease in volume and were down compared to the prior and year-ago quartersquarter, despite increasesan increase in factoring volumevolumes, as a reductionchange in theportfolio mix of higher risk receivables put downward pressure on pricing. Factoring volume was $6.8down 4% from the prior quarter due to seasonality and up 9% from the year-ago quarter, driven by an increase in the technology industry. Factoring volume was $7.4 billion for the current quarter, up from $5.9$6.8 billion in the year-ago quarter, and unchanged from$7.7 billion last quarter.salesleasing equipment, net of leasing equipment resulted from $51 million of equipment sales in the current quarter, $60 million in the year-ago quarter, and $102 million in the prior quarter. In each of the quarters, while the gainsimpairments were driven by sales of rail equipment the majority of the equipment sold wasand other types of equipment in Business Capital and NSP.Capital. Gains as a percentage of equipment sold which will vary based on the type and age of equipment sold, decreased from last quarter and the year-ago quarter.sold. See table entitledEquipment Sales in theFinancingLoans and Leasing AssetsLeases section that displays amounts sold by segment. (losses) on loan and portfolio sales resulted from $172 million of sales in the current quarter, $114 million in the year-ago quarter, and $754 million in the prior quarter, reflecting the sale of the Canadian Equipment and Corporate Finance businesses in NSP. Gains and losses will vary based on the underlying loan and market conditions. See table entitledLoan and Portfolio Sales in theFinancing and Leasing Assets section that displays amounts sold by segment.Item 2. Management’s Discussion and Analysis andItem 3.Quantitative and Qualitative Disclosures about Market Risk 67Gains (losses) on investments, include net of impairments mostly reflected gains on sales of mortgage-backed securities, changes in value of mortgage-backed securities carried at fair value, and also derived fromto a lesser extent, sales of equity investments that were received as part of a lending transaction, or in some cases, a workout situation. The prior quarter was driven by a single equity sale in Commercial Banking.Gains on OREO sales reflect sales and adjustments to the carrying value of real estate owned assets. OREO properties pertain to foreclosures in the mortgage portfolios specific to the Consumer Banking segment.Termination fees on Canadian TRS reflect payment to GSI on December 7, 2016,During 2017, essentially all of the presentMBSs carried at fair value of the remaining facility feewere sold or matured, resulting in an amount equal to approximately $280 million. Although associated with removal of the derivative liability related to the unused portion of the Canadian TRS derivative noted below, the payment was a termination fee, and thus recorded separately and not combined with the derivative liability benefit of $37 million from the reversal of mark-to-market charges.Impairment on assets held for sale in the year-ago quarter was driven by impairments on the portfolios held for sale in NSP. When an operating lease asset is classified as held for sale, depreciation expense is suspended and the asset is evaluated for impairment with any such charge recorded in other income. (SeeOther Expenses for related discussion on depreciation on operating lease equipment.)Net (losses)lower gains on derivatives and foreign currency exchange includes valuation of the derivatives within the TRS, which resulted in losses of $1 million in the current quarter and gains of $18 million in the year ago quarter. The TRS derivative loss in the current quarter was primarily duecompared to the narrowing of credit spread inputs toprior quarter.fairchanges in value model. The prior quarter reflected valuations of the Canadian TRSbank-owned life insurance ("BOLI") policies CIT purchased on certain officers and our Dutch subsidiary’s total return swap facility (the “Dutch TRS”, together withemployees. These policies were purchased during the Canadian TRS, collectively, the “TRS Transactions”) that resulted in a gainsecond half of $37 million, primarily due to the reversal of the mark-to-market charge upon the termination of the Canadian TRS.2017.Foreign currency movements and other exposures resulted net losses of $3 million and $9 million and a net gain of $16 million for the current quarter, year-ago quarter and prior quarter, respectively. On a gross basis, transactional foreign currency movements resulted in gains of $2 million in the current quarter and $24 million in the year-ago quarter, and losses of $30 million in the prior quarter. Respectively, the impact of these transactional foreign currency movements was offset by losses of $5 million and $33 million, and gains of $46 million, on derivatives that economically hedge foreign currency movements and other exposures.In addition, there were losses of $8 million in the current quarter and no losses in the year-ago and prior quarters, on the realization of cumulative translation adjustment (“CTA”) amounts from AOCI due to translational adjustments related to liquidating portfolios.For additional information on the impact of derivatives on the income statement, refer toNote 7 — Derivative Financial Instruments inItem 1. Financial Information.revenuesrevenue in the prior quarter included a noteworthy item of $29 million related to the cumulative effect of an accounting policy change for low income housing tax credit ("LIHTC") investments. Other revenue in the year-ago quarter included a gain on salenoteworthy item related to a currency translation charge of the U.K. business of $24 million in NSP.$8 million.68 CIT GROUP INCNon-Interest Expense (dollars in millions) Quarters Ended Quarters Ended March 31,
2017 December 31,
2016 March 31,
2016March 31,
2018 December 31,
2017 March 31,
2017Depreciation on operating lease equipment $ (73.5 ) $ (69.8 ) $ (61.3 ) $ 76.4 $ 74.3 $ 73.5 Maintenance and other operating lease expenses (53.8 ) (57.5 ) (48.9 ) 57.4 57.9 53.8 Operating expenses: Compensation and benefits (143.3 ) (133.4 ) (157.7 ) 147.8 138.6 143.3 Technology 32.4 30.7 32.7 Professional fees (39.8 ) (58.6 ) (37.3 ) 25.8 28.8 39.8 Technology (32.7 ) (40.0 ) (30.3 ) Insurance (25.6 ) (19.1 ) (24.9 ) 19.9 15.7 25.6 Net occupancy expense (19.9 ) (19.5 ) (17.9 ) 16.2 16.7 19.9 Advertising and marketing (5.4 ) (6.3 ) (5.2 ) 13.0 12.8 5.4 Other (23.9 ) (54.1 ) (30.1 ) Other expenses 20.2 22.7 23.9 Operating expenses, excluding restructuring costs and intangible asset amortization (290.6 ) (331.0 ) (303.4 ) 275.3 266.0 290.6 Intangible assets amortization (6.2 ) (6.4 ) (6.4 ) Provision for severance and facilities exiting activities (14.8 ) (3.9 ) (20.3 ) Intangible asset amortization 6.0 6.1 6.2 Restructuring costs — 31.9 14.8 Total operating expenses (311.6 ) (341.3 ) (330.1 ) 281.3 304.0 311.6 Goodwill impairment – (354.2 ) – — 255.6 — Loss on debt extinguishments and deposit redemptions – (3.3 ) (1.6 ) Loss on debt extinguishment and deposit redemption 0.1 1.7 — Total non-interest expenses $ (438.9 ) $ (826.1 ) $ (441.9 ) $ 415.2 $ 693.5 $ 438.9 Headcount 4,060 4,080 4,300 3,898 3,909 4,058 2.49 % 2.82 % 2.52 % 2.43 % 2.39 % 2.49 % 2.49 % 2.59 % 2.52 % 58.6 % 109.2 % 57.6 % 55.6 % 49.6 % 58.6 % 57.7 % 58.0 % 58.7 % 56.7 % 53.4 % 57.7 % Operating expenses excluding restructuring costs and intangible asset amortization as a % of AEA is a non-GAAP measure; see “Non-GAAP Financial Measurements” for a reconciliation of non-GAAP to GAAP financial information. Net efficiency ratio and net efficiency ratio adjusted are non-GAAP measurements used by management to measure operating expenses (before restructuring costs and intangible amortization) to the level of total net revenues. See “Non-GAAP Financial Measurements” for a reconciliation of non-GAAP to GAAP financial information.information and description of the calculation.Impairments recorded on equipment held in our portfolio are reported as depreciation expense. Equipment held for sale also impacts the balance, as depreciation expense is suspended on operating lease equipment once it is transferred to AHFS. The increase in depreciation expense reflects portfolio growth and mix, as the equipment other than rail have shorter lives, which increased depreciation in the current quarter. Depreciation expense is also discussed in“Net Finance Revenue,” as it is a component of our asset margin.NFM. See“Non-interestNon-Interest Income” for impairment charges on operating lease equipment classified as held for sale. Thewasdriven primarily by higher reflecting higher lease returns.Item 2. Management’s Discussion and Analysis andItem 3.Quantitative and Qualitative Disclosures about Market Risk 69Operating ExpensesThe first quarter is generally higher due to compensation and benefits, increases resulting fromdue to the annual restart of certain benefit costs, at the outset of each year. However, noteworthy items and other elevated costs in the prior quarter relatedhigher FDIC insurance costs. Compared to legacy OneWest Bank matters were the main driver of the sequential quarter decline in this metric. The decrease from the year-ago quarter, reflects results fromoperating expenses were down, reflecting lower professional fees and FDIC insurance costs, partially offset by higher advertising and marketing costs.expense reduction initiatives.We continue to make progress on our goal of $150 million in operating expense reductions by 2018 through organizational alignment, technologycosts and operations improvements and third party initiatives. As of the end of the current quarter, we have achieved approximately 40% of that goal and remainare on track to reachachieve the reduction of our target.annual operating expense to our target of $1,050 million (before intangible amortization) for 2018 through reduction of consulting services and other professional fees and continuing to right-size the organization.nCompensation and benefits decreased from the year-ago quarter, primarily reflecting the impact of fewer employees, whereas the sequential increase reflects the restart of certain benefit costs. Throughout 2016, we reduced the number of total employees primarily as a result of business sales and other strategic initiatives.nProfessional fees included legal and other professional fees, such as tax, audit, and consulting services. Professional fees were down from the prior quarter as lower costs incurred for various strategic initiatives, consulting services related to strategic reviews of our businesses and third-party costs to assist in improving our capital planning and CCAR reporting capabilities offset increased audit fees.nTechnology costs decreased from the prior quarter due to the timing of anticipated costs. The prior quarter included charges to write-off certain capitalized IT costs.nInsurance expenses increased from the prior quarter, mostly reflecting higher FDIC costs.nNet Occupancy expenses were up from the year-ago quarter reflecting costs associated with consolidating office space.nAdvertising and marketing expenses include costs associated with raising deposits and may fluctuate based on timing of marketing programs.nProvision for severance and facilities exiting activities primarily reflects strategic initiatives to reduce operating expenses and streamline our operations, which resulted in employee reductions compared to the year-ago period.nAmortization of intangible assets primarily results from intangible assets recorded in the OneWest Bank acquisition.nOther expenses include items such as travel and entertainment, office equipment and supplies and taxes (other than income taxes, such as state sales tax, etc.), and from time to time includes settlement agreement costs, including OneWest Bank legacy matters. Other expenses increased in the prior quarter reflecting OneWest Bank activity and legacy matters, such as servicing related contingent obligations, items related to the loss share agreements with the FDIC, and other indemnifications that were inherited by CIT from OneWest Bank with the acquisition.The Company recordedof $319.4 million and $34.8 millioncharges, mostly related to Equipment Finance in the Consumer Banking andour Commercial Banking segments, respectively, during the fourth quarter of 2016.segment.Loss on debt extinguishments and deposit redemptions in the prior-year quarter related to certain secured debt instruments, while the prior quarter mostly resulted from the early repayment of brokered certificates of deposits.Income Tax Data (dollars in millions) Quarters Ended March 31,
2017 December 31,
2016 March 31,
2016Provision (benefit) for income taxes, before discrete items $ 44.9 $ (65.1 ) $ 55.4 Quarters Ended March 31, 2018 December 31, 2017 March 31, 2017 Provision for income taxes, before discrete items $ 39.6 $ 45.4 $ 44.9 Discrete items 11.3 58.5 (11.0 ) 1.7 (17.7 ) 11.3 Provision (benefit) for income taxes $ 56.2 $ (6.6 ) $ 44.4 $ 41.3 $ 27.7 $ 56.2 Effective tax rate 41.8 % 1.5 % 42.1 % 28.5 % (50.3 )% 41.8 % 33.4 % 15.1 % 52.6 % 27.3 % 39.4 % 31.9 % Effective tax rate excluding discrete items is aor noteworthy items are non-GAAP measure.measures. See “Non-GAAP Measurements” for reconciliation of non-GAAP financial information.70 CIT GROUP INChigher in the current quarter,lower this year, as compared to the prior year quarter and year-ago quarter, primarily driven by deferred federallower statutory income tax rates from U.S. tax reform, partially offset by the impact of the change in accounting method for the LIHTC investments, disallowance of FDIC insurance premiums, and state income taxes.increased domestic earnings,deferred tax assets established on the capital losses generated in the prior year from an equity investment in a wholly-owned foreign subsidiary,shiftedincludes $5.3 million deferred income tax expense resulting from revaluation of U.S. state deferred tax assets and liabilities as a result of state tax rate changes, partially offset by $1.6 million of net tax benefits from various other U.S. federal, state, and international discrete tax items,geographic mixincrease to the deferred tax liability on the Company’s investment in NACCO, which is categorized as “held for sale.”certain noteworthy itemsprofits (“E&P”) due to provisions in prior quarter.the U.S. Tax Reform that imposes a one-time “Toll Tax” on unremitted net positive E&P. This tax converts the net positive E&P into “previously taxed income” that can be repatriated without any further tax. The higher year-ago quarterCompany has a net deficit in E&P and, accordingly, has no Toll Tax liability,provision was primarily driven by certain itemsexpense line for an increase in pretaxamortization expense resulting from revaluation of the LIHTC investments,that shiftedtax benefit related to revaluation of the geographic mixU.S. deferred tax assets and liabilities as a result of earnings comparedchange in U.S federal tax rates from 35% to 21% with an effective date of January 1, 2018, andprior periods.recognition of NACCO related items including impact of French tax law changes of an $11.0 million deferred tax benefit and adjustments to deferred taxes on the Company’s investment in NACCO of $12.0 million deferred tax expense, which is now categorized as “held for sale,”The$3.3 million of miscellaneous net tax expense items.currentyear-ago quarter included a $13.9was:sale. Includedsale,prior quarter’s discreterevaluation of deferred taxes from state tax rate changes, andof $58.5 million wasitems.recognition of approximately $53.5 million tax expense related to establishment of domestic and international deferred tax liabilities due to Management’s decision to no longer assert its intent to indefinitely reinvest its unremitted earnings in Canada. Included in the year-ago quarter’s net discrete tax benefit of $11.0 million included $13.9 million tax benefit, including interest and penalties, resulting from favorable resolution of a tax position on an international portfolio previously sold.We expect the 20172018 global effective tax rate to be in the mid 30% range, before the impact ofapproximately 26% to 28%, excluding discrete tax items and noteworthy items. However, there will be a minimal impact onFurthermore, cash income taxes paid will remain minimal until the relatedCompany's NOL carry-forward iscarry-forwards are fully utilized. The taxable income expectedCommercial Air transaction will help utilize a significant amount$2.4 billion U.S. federal NOLs, approximately $1.0 billion relate to the pre-emergence bankruptcy period and are subject to the Section 382 limitation. CIT's bankruptcy reorganization in 2009 resulted in an ownership change under Section 382 of the Internal Revenue Code, which placed an annual dollar limit on the use of the remaining pre-bankruptcy NOLs. The Company's annual limitation on use of pre-bankruptcy NOLs in 2017. Additionally,is approximately $265 million per annum. Approximately $1.4 billion of the Company will expect to incur some amount of U.S. federal andNOL is not subject to the limitation. The U.S. federal NOLs will begin to expire beginning in 2028 through 2036. Approximately $188 million of state cash taxes, after applying available tax credits. NOLs will expire in 2018. While most of the non-U.S. NOLs have no expiration date, a small portion will expire over various periods, including an insignificant amount expiring in 2018.Company’s annual limitation on use of the remaining pre-bankruptcy NOLs, which is approximately $265 million per annum.aforementioned limitation. Cash taxes were a net refundpayment of $0.2$3.2 million for the current quarter, compared to a net refund of $11.3$2.5 million in the prior quarter, and $0.2 million net paymentrefund in the year-ago quarter.—- Income Taxes inItem 1. Consolidated Financial Statements for additional information, including deferred tax assets.assets and specific tax discrete items.segments:segments, Commercial Banking, Consumer Banking, and Non-Strategic Portfolios, (“NSP”), and a non-operating segment, Corporate and Other.SEGMENTSCommercial Banking is comprised of four divisions: Commercial Finance, Rail, Real Estate Finance and Business Capital. Revenue is generated from interest earned on loans, rents on equipment leased, fees and other revenue from lending and leasing activities and banking services, along with capital markets transactions and commissions earned on factoring and related activities. A detailed description of the divisions is included at the end ofItem 1. Business Overview in our Annual Report on Form 10-K for the year ended December 31, 2016.2017.
Commercial Banking: Financial Data and Metrics (dollars in millions) Quarters Ended Earnings Summary March 31,
2017 December 31,
2016 March 31,
2016Interest income $ 307.5 $ 322.0 $ 324.0 Rental income on operating leases 251.3 252.2 260.2 Finance revenue 558.8 574.2 584.2 Interest expense (119.8 ) (126.9 ) (130.2 ) Depreciation on operating lease equipment (73.5 ) (69.8 ) (61.3 ) Maintenance and other operating lease expenses (53.8 ) (57.5 ) (48.9 ) Net finance revenue (NFR) 311.7 320.0 343.8 Provision for credit losses (49.2 ) (30.8 ) (86.4 ) Other income 72.3 91.6 58.0 Operating expenses (178.7 ) (183.2 ) (197.4 ) Goodwill impairment – (34.8 ) – Income before provision for income taxes $ 156.1 $ 162.8 $ 118.0 Quarters Ended Earnings Summary March 31,
2018 December 31,
2017 March 31,
2017Interest income $ 314.9 $ 314.5 $ 307.5 Rental income on operating leases 253.6 252.6 251.3 Finance revenue 568.5 567.1 558.8 Interest expense 156.3 138.8 119.8 Depreciation on operating lease equipment 76.4 74.3 73.5 Maintenance and other operating lease expenses 57.4 57.9 53.8 Net finance revenue (NFR) 278.4 296.1 311.7 Provision for credit losses 67.2 28.6 49.2 Other non-interest income 78.0 73.0 72.3 Operating expenses 183.1 167.9 178.7 Goodwill impairment — 255.6 — Income (loss) before income taxes $ 106.1 $ (83.0 ) $ 156.1 Select Period End Balance Loans and leases $ 31,497.1 $ 31,232.4 $ 30,731.2 Earning assets (net of credit balances of factoring clients) 30,193.7 30,039.0 29,428.8 Select Average Balances Average loans (includes HFS, and net of credit balances) $ 21,813.6 $ 21,420.2 $ 21,549.9 Average operating leases (AOL)* (includes HFS) 7,934.6 7,841.0 7,500.9 Average earning assets (AEA) 30,021.7 29,507.3 29,304.7 Statistical Data Net finance margin - NFR as a % of AEA 3.71 % 4.01 % 4.25 % Net operating lease revenue — rental income, net of depreciation and maintenance and other operating lease expenses* $ 119.8 $ 120.4 $ 124.0 Operating lease margin as a % of AOL* 6.04 % 6.14 % 6.61 % Net efficiency ratio 51.0 % 45.1 % 46.1 % Pretax return on AEA 1.41 % (1.13 )% 2.13 % New business volume $ 2,267.2 $ 2,902.0 $ 1,615.4 Factoring volume $ 7,426.0 $ 7,731.2 $ 6,811.6 71 Quarters Ended March 31,
2017 December 31,
2016 March 31,
2016Financing and leasing assets $ 30,731.2 $ 30,406.1 $ 31,111.6 Earning assets 30,976.0 30,695.2 31,594.8 Average finance receivables (AFR) $ 22,749.7 $ 22,752.2 $ 23,521.9 Average operating leases (AOL) 7,500.7 7,425.6 6,940.4 Average earning assets (AEA) 29,304.7 29,504.7 29,966.6 Net operating lease revenue — rental income, net of depreciation and maintenance and other operating lease expenses $ 124.0 $ 124.9 $ 150.0 Operating lease margin as a % of AOL 6.61 % 6.73 % 8.65 % Net efficiency ratio 46.2 % 52.6 % 48.7 % Pretax return on AEA 2.13 % 2.21 % 1.58 % New business volume $ 1,615.4 $ 2,042.2 $ 1,777.0 Factoring volume $ 6,811.6 $ 6,820.5 $ 5,873.8 Net finance revenue: Commercial Finance $ 97.8 $ 110.4 $ 113.5 Rail 81.8 78.1 100.2 Real Estate Finance 48.2 52.2 54.5 Business Capital 83.9 79.3 75.6 Segment total $ 311.7 $ 320.0 $ 343.8 Net finance margin — NFR as a % of AEA Commercial Finance 3.83 % 4.15 % 3.82 % Rail 4.47 % 4.29 % 5.82 % Real Estate Finance 3.46 % 3.80 % 4.08 % Business Capital 5.41 % 5.23 % 5.17 % Segment total 4.25 % 4.34 % 4.59 % Commercial Banking pre-tax earnings decreasedthe prior quarter driven by lower net finance revenue and higher credit costs, partially offset by lower expenses. The prior quarter included a $35 million goodwill impairment charge partially offset by a gain on an investment related to a loan workout reflected$7.3 billion in other income. Pre-tax earnings increased relative to the year-ago quarter reflecting lower credit costs and operating expenses, partially offset by a decrease in net finance revenue.Financing and leasing assets (“FLA”), which comprise the vast majority of earning assets, were $30.7 billion at March 31, 2017, up 1% from the prior quarter, driven by higher factoring receivables. The 1% decrease from the year-ago quarter was driven by sales in the Commercial Finance division, which offset increases in each of the other divisions.New lending and leasing volume of $1.6 billion was down from the prior quarter, reflecting seasonality and market trends, and down from the year-ago quarter primarily due to weak market conditions in middle market lending.Factored volume of $6.8 billion was flat with the prior quarter and up 16% compared to the year-ago quarter, driven by increased volume across all industries, especially technology.Rail financing and leasing assets were flatslightly from the prior quarter at $7.2 billion and were up from $6.9$7.6 billion in the prior-yearprior quarter. During 2017, we entered into a definitive sale agreement to sell our European rail business, which consists of approximately $1.2 billion of loans and leases in AHFS, including approximately 15,000 railcars. All remaining antitrust approvals were received by the buyer from the European regulators this quarter, which includes a condition to sell approximately 30% of the NACCO cars to other parties. This additional requirement does not impact the overall economics to us and we are targeting to close the sale in the second half of 2018. Our portfolio includes approximately 132,000 railcars, including the railcars of 134,000 railcars is flat to prior quarter and prior year quarter. Absent acquisitions, rail assets are primarily originated through purchase commitments with manufacturers and are also supplemented by spot purchases.the European business. At March 31, 2017,2018, we had approximately 2,5202,120 railcars on order from manufacturers, withof which 1,264 related to our North America business that had deliveries scheduled through 2018.n▪ The netNet finance revenue and net finance margin both("NFR") decreased from both the year-ago and prior quarter, reflecting lower72 CIT GROUP INCquarters. The decreases were primarily driven by higher interest expense, that was more than offset by a declinereflecting increases in interest rates and growth in the portfolio, as well as lower purchase accounting accretion and lower prepayment benefits in the Commercial Finance and Real Estate Finance divisions. and lower net rental income in Rail. The decreases were partially offset by the benefit of higher interest rates on earning assets. Compared to the year-ago quarter, the decrease was partially offset by the suspended depreciation related to NACCO.▪ Net Finance Margin ("NFM") was down compared to the year-ago and prior quarters, reflecting the impact of lower NFR as discussed above and slightly higher average earning assets which were 2% higher compared to both the prior and year-ago quarters. ▪ $24$11 million, $35$16 million and $39$24 million in the current, prior and year-ago quarters, respectively.respectively, and continues to trend down. Essentially all accretion benefited interest income, with a small amount decreasing interest expense. (Purchase accounting accretion is depicted in tabular form in theNet Finance Revenue section). The current quarter, prior and year-ago quarters included $10$4 million, $18$8 million and $15$10 million, respectively, of PAA that was accelerated due to prepayments. In the Rail division, declining portfolio yields due to lower rates on renewals were offset by lower interest and maintenance expenses.▪ Net finance revenue was down from the year-ago quarter, primarily due to lower earning assets and lower purchase accounting accretion in the Commercial Finance and Real Estate Finance divisions, and lowerthe Rail division.nGross yieldsCommercial Banking were down from both the year-ago and prior quarters. The decrease compared to prior and year-ago quarters reflects lower purchase accounting accretion and lower prepayment benefits in thedeclines reflect continued pressure on rail as discussed below. The Commercial Finance and Real Estate Finance divisions, both of which maskedincrease in gross yields from the impactyear-ago quarter was primarily driven by the benefit of higher LIBORshort-term interest rates, as well as lower renewal ratespartially offset by a decline in PAA, which also drove the Rail division. These offset higher yields in Business Capital.division’s decrease from the prior quarter. See Select Segment and Division Margin Metrics table in Net Finance Revenue section for amounts of purchase accounting accretion and gross yields by division.n▪ Net operating lease revenue, which is a component of NFR, is driven primarily by the performance of our rail portfolio. Net operating lease revenue was essentially flatRail’s net rental income decline, excluding the suspension of depreciation expense related to NACCO, from both the year-ago and prior quarter and decreased from the prior year quarter,quarters were mainly driven by renewal rates that continue to price lower due to lower renewal lease rates, as well as higher depreciation. Rental rates continued to decline as average leaseexcess capacity in the market. We expect renewal rates re-priced down 20-30%, in many cases from historical highs. We expect this rate to continue to be below expiring rates through 2018 and into 2019. This re-pricing will fluctuate depending on the number and types of cars renewing during any given quarter. Suspended depreciation on operating lease equipment in assets held for sale totaled about $9 million for the current and while there are signs of stabilization in certain car types, such as sand cars, demand for energy-related tank cars remains weak. Given current market conditions, we expect to see continued deterioration in portfolio yields through 2017 and average renewal rates to continue to re-price downprior quarters, with no suspended depreciation in the same 20-30% range.nyear-ago quarter. Excluding the suspended depreciation, the current and prior quarter operating lease margin would have declined to 5.57% and 5.69%, respectively. Railcar utilization, including commitments to lease, remained flatwas up at 94%97% from prior quarter and from the year-ago quarter.95% at December 31, 2017.n▪ Other non-interest income increased from the year-ago quarter and decreased from the prior quarter, reflecting the following:n▪ Factoring commissions of $26 million were flat fromdown compared to the year-ago and prior quartersquarter, despite increasesan increase in factoring volumes, as a reductionchange in the portfolio mix of higher risk receivables put downward pressure on pricing.pricing, and down from the prior quarter, reflecting the seasonal decrease in volume.n▪ Gains on asset sales (including receivables, equipment and investments), net of impairments, totaled $14$17 million, up from $4compared to $14 million in the year-ago quarter and down from $34$12 million in the prior quarter. The prior quarter gain wasgains for the quarters were primarily driven by a $22 million gain on an investment related to a loan workout in the Commercial Finance division.sales of rail cars.n▪ Fee revenue is mainly driven by fees on lines of credit and letters of credit, capital markets-related fees, agent and advisory fees and banking related fees, including cash management and account fees. Fee revenue was $27$25 million in the current quarter, consistent withdown from $27 million in the year-ago quarter and $24$28 million in the prior quarter, primarily driven by higheron lower capital market feesfees.▪ The provision for credit losses in the current quarter totaled $67 million, compared to $49 million in the year-ago quarter and $29 million in the prior quarter. The increase in the provision this quarter reflected a $22 million charge-off of a single commercial exposure and a higher level of reserves primarily within the Commercial Finance division. n▪ The provision for credit losses was $49Net charge-offs were $50 million (0.86% of average loans), $27 million (0.48%) in the currentyear-ago quarter compared to $31and $18.0 million (0.32%) in the prior quarter, and $86 million in the year-ago quarter. The increase in provision from the prior quarter was primarilyincreases were driven by a specific reserve onthe noted charge-off of a single account in the factoring business within the Business Capital division.credit.▪ Non-accrual loans were $199 million (0.85% of loans), compared to $191 million (0.82%) at December 31, 2017, and $234 million (1.02%) at March 31, 2017. The declinedecrease from the year-ago quarter was in the Commercial Finance division and reflected lower provision amounts for the energy and maritime sectors.Business Capital divisions.▪ Net charge-offs were $27 million (0.48% of average finance receivables), compared to $23 million (0.41%) in the prior quarter and $32 million (0.55%) in the year-ago quarter. The increase from the prior quarter was driven by the Business Capital and Real Estate Finance divisions, partially offset by decreases in the Commercial Finance division.Non-accrual loans were $234 million (1.02% of finance receivables), compared to $251 million (1.11%) at December 31, 2016, and $215 million (0.90%) a year-ago. The decrease from the prior quarter reflected a reduction in the Commercial Finance division, including lower energy and maritime non-accrual loans. The decreaseOperating expenses increased from the year-ago quarter was driven by the declineand prior quarters, both reflecting higher legal fees in the energy portfolio, partially offset by an increase in the maritime business.Rail and higher employee costs.nOperating expenses declined $4 million from the prior quarter and $19 million from the year-ago quarter reflecting lower employee related costs. The decrease from the prior quarter also reflects lower sales tax and legal expenses.Item 2. Management’s Discussion and Analysis andItem 3.Quantitative and Qualitative Disclosures about Market Risk 73
CIT GROUP INC. 572016.2017.
Quarters Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Earnings Summary | March 31, 2017 | December 31, 2016 | March 31, 2016 | ||||||||||||
Interest income | $ | 100.0 | $ | 106.9 | $ | 105.3 | |||||||||
Finance revenue | 100.0 | 106.9 | 105.3 | ||||||||||||
Interest benefit (expense) | 6.5 | 3.6 | (8.0 | ) | |||||||||||
Net finance revenue (NFR) | 106.5 | 110.5 | 97.3 | ||||||||||||
Provision for credit losses | (0.5 | ) | (5.9 | ) | (3.1 | ) | |||||||||
Other income | 7.9 | 7.0 | 8.2 | ||||||||||||
Operating expenses | (95.6 | ) | (122.7 | ) | (85.1 | ) | |||||||||
Goodwill impairment | – | (319.4 | ) | – | |||||||||||
Income (loss) before provision for income taxes | $ | 18.3 | $ | (330.5 | ) | $ | 17.3 | ||||||||
Select Period End Balance | |||||||||||||||
Financing and leasing assets | $ | 6,876.9 | $ | 7,041.8 | $ | 7,219.7 | |||||||||
Earning assets | 7,190.0 | 7,383.2 | 7,601.1 | ||||||||||||
Deposits | 22,584.1 | 22,542.2 | 23,257.3 | ||||||||||||
Select Average Balances | |||||||||||||||
Average finance receivables (AFR) | $ | 6,888.7 | $ | 7,052.7 | $ | 7,145.9 | |||||||||
Average earning assets (AEA)(1) | 7,291.8 | 7,457.8 | 7,588.7 | ||||||||||||
Statistical Data | |||||||||||||||
Net efficiency ratio | 79.5 | % | 100.5 | % | 76.3 | % | |||||||||
Pretax return on AEA | 1.00 | % | (17.73 | )% | 0.91 | % | |||||||||
New business volume | $ | 154.7 | $ | 198.5 | $ | 214.5 | |||||||||
Select Divisional Data | |||||||||||||||
Net finance revenue: | |||||||||||||||
Other Consumer Banking | $ | 46.6 | $ | 46.6 | $ | 33.7 | |||||||||
Legacy Consumer Mortgages | 59.9 | 63.9 | 63.6 | ||||||||||||
Segment total | $ | 106.5 | $ | 110.5 | $ | 97.3 | |||||||||
Net finance margin — NFR as a % of AEA | |||||||||||||||
Other Consumer Banking | 8.61 | % | 8.66 | % | 7.56 | % | |||||||||
Legacy Consumer Mortgages | 4.67 | % | 4.82 | % | 4.38 | % | |||||||||
Segment total | 5.84 | % | 5.93 | % | 5.13 | % |
Quarters Ended | |||||||||||
Earnings Summary | March 31, 2018 | December 31, 2017 | March 31, 2017 | ||||||||
Interest income | $ | 85.2 | $ | 84.3 | $ | 100.0 | |||||
Interest benefit | (24.3 | ) | (19.7 | ) | (6.5 | ) | |||||
Net finance revenue (NFR) | 109.5 | 104.0 | 106.5 | ||||||||
Provision for credit losses | 1.6 | 1.8 | 0.5 | ||||||||
Other non-interest income | 11.5 | 13.2 | 7.9 | ||||||||
Operating expenses | 96.0 | 103.5 | 95.6 | ||||||||
Income before income taxes | $ | 23.4 | $ | 11.9 | $ | 18.3 | |||||
Select Period End Balance | |||||||||||
Loans (includes HFS) | $ | 6,971.7 | $ | 6,820.2 | $ | 6,876.9 | |||||
Earning assets | 7,092.2 | 6,962.6 | 7,190.0 | ||||||||
Deposits | 24,915.4 | 23,421.8 | 22,584.1 | ||||||||
Select Average Balances | |||||||||||
Average loans (includes HFS) | $ | 6,878.8 | $ | 6,728.0 | $ | 6,963.9 | |||||
Average earning assets (AEA) | 7,009.4 | 6,885.6 | 7,291.8 | ||||||||
Statistical Data | |||||||||||
Net finance margin - NFR as a % of AEA | 6.25 | % | 6.04 | % | 5.84 | % | |||||
Net efficiency ratio | 75.5 | % | 84.4 | % | 79.5 | % | |||||
Pretax return on AEA | 1.34 | % | 0.69 | % | 1.00 | % | |||||
New business volume | $ | 388.6 | $ | 421.9 | $ | 154.7 |
▪ | NFR of |
▪ | Other non-interest income included gains and (losses) on |
▪ | Non-accrual loans were |
▪ | Operating expenses |
Quarters Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Earnings Summary | March 31, 2017 | December 31, 2016 | March 31, 2016 | ||||||||||||
Interest income | $ | 7.0 | $ | 10.0 | $ | 25.0 | |||||||||
Rental income on operating leases | – | – | 3.9 | ||||||||||||
Finance revenue | 7.0 | 10.0 | 28.9 | ||||||||||||
Interest expense | (5.0 | ) | (6.3 | ) | (14.5 | ) | |||||||||
Net finance revenue (NFR) | 2.0 | 3.7 | 14.4 | ||||||||||||
Other income | (2.9 | ) | 26.0 | 14.4 | |||||||||||
Operating expenses | (2.0 | ) | (6.8 | ) | (12.2 | ) | |||||||||
Income (loss) before provision for income taxes | $ | (2.9 | ) | $ | 22.9 | $ | 16.6 | ||||||||
Select Period End Balance | |||||||||||||||
Financing and leasing assets | $ | 162.1 | $ | 210.1 | $ | 1,176.2 | |||||||||
Earning assets | 348.2 | 433.4 | 1,410.4 | ||||||||||||
Select Average Balances | |||||||||||||||
Average earning assets (AEA) | 367.5 | 625.6 | 1,515.6 | ||||||||||||
Statistical Data | |||||||||||||||
Net finance margin — NFR as a % of AEA | 2.18 | % | 2.37 | % | 3.80 | % | |||||||||
Pretax return on AEA | (3.16 | )% | 14.64 | % | 4.38 | % | |||||||||
New business volume | $ | – | $ | – | $ | 44.3 |
Quarters Ended | |||||||||||
Earnings Summary | March 31, 2018 | December 31, 2017 | March 31, 2017 | ||||||||
Interest income | $ | 2.4 | $ | 5.1 | $ | 7.0 | |||||
Finance revenue | 2.4 | 5.1 | 7.0 | ||||||||
Interest expense | 1.7 | 2.2 | 5.0 | ||||||||
Net finance revenue (NFR) | 0.7 | 2.9 | 2.0 | ||||||||
Other non-interest income | 1.2 | 0.9 | (2.9 | ) | |||||||
Operating expenses | 2.2 | (0.3 | ) | 2.0 | |||||||
(Loss) income before income taxes | $ | (0.3 | ) | $ | 4.1 | $ | (2.9 | ) | |||
Select Period End Balance | |||||||||||
Loans and leases | $ | 58.5 | $ | 63.3 | $ | 162.1 | |||||
Earning assets | 151.3 | 145.3 | 348.2 | ||||||||
Select Average Balances | |||||||||||
Average earning assets (AEA) | 148.6 | 188.0 | 367.5 | ||||||||
Statistical Data | |||||||||||
Net finance margin — NFR as a % of AEA | 1.88 | % | 6.17 | % | 2.18 | % | |||||
Pretax return on AEA | (0.81 | )% | 8.72 | % | (3.16 | )% |
Tablepre-tax income of Contents
Quarters Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Earnings Summary | March 31, 2017 | December 31, 2016 | March 31, 2016 | ||||||||||||
Interest income | $ | 41.2 | $ | 35.2 | $ | 28.6 | |||||||||
Interest expense | (44.8 | ) | (48.7 | ) | (42.3 | ) | |||||||||
Net finance revenue (NFR) | (3.6 | ) | (13.5 | ) | (13.7 | ) | |||||||||
Other income | 1.8 | (242.2 | ) | 4.2 | |||||||||||
Operating expenses and loss on debt extinguishment and deposit redemption | (35.3 | ) | (31.9 | ) | (37.0 | ) | |||||||||
Loss before provision for income taxes | $ | (37.1 | ) | $ | (287.6 | ) | $ | (46.5 | ) | ||||||
Select Period End Balance | |||||||||||||||
Earning assets | $ | 9,460.7 | $ | 9,587.2 | $ | 8,764.2 |
|
March 31, 2017 | December 31, 2016 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Commercial Banking | |||||||||||
Commercial Finance | |||||||||||
Loans | $ | 9,638.0 | $ | 9,923.9 | |||||||
Assets held for sale | 332.1 | 351.4 | |||||||||
Financing and leasing assets | 9,970.1 | 10,275.3 | |||||||||
Rail | |||||||||||
Loans | 104.7 | 103.7 | |||||||||
Operating lease equipment, net | 7,120.5 | 7,117.1 | |||||||||
Assets held for sale | 0.6 | 0.3 | |||||||||
Financing and leasing assets | 7,225.8 | 7,221.1 | |||||||||
Real Estate Finance | |||||||||||
Loans | 5,655.4 | 5,566.6 | |||||||||
Financing and leasing assets | 5,655.4 | 5,566.6 | |||||||||
Business Capital | |||||||||||
Loans | 7,480.5 | 6,968.1 | |||||||||
Operating lease equipment, net | 395.7 | 369.0 | |||||||||
Assets held for sale | 3.7 | 6.0 | |||||||||
Financing and leasing assets | 7,879.9 | 7,343.1 | |||||||||
Total Segment | |||||||||||
Loans | 22,878.6 | 22,562.3 | |||||||||
Operating lease equipment, net | 7,516.2 | 7,486.1 | |||||||||
Assets held for sale | 336.4 | 357.7 | |||||||||
Financing and leasing assets | 30,731.2 | 30,406.1 | |||||||||
Consumer Banking | |||||||||||
Legacy Consumer Mortgages | |||||||||||
Loans | 4,692.8 | 4,829.9 | |||||||||
Assets held for sale | 41.4 | 32.8 | |||||||||
Financing and leasing assets | 4,734.2 | 4,862.7 | |||||||||
Other Consumer Banking | |||||||||||
Loans | 2,120.0 | 2,143.7 | |||||||||
Assets held for sale | 22.7 | 35.4 | |||||||||
Financing and leasing assets | 2,142.7 | 2,179.1 | |||||||||
Total Segment | |||||||||||
Loans | 6,812.8 | 6,973.6 | |||||||||
Assets held for sale | 64.1 | 68.2 | |||||||||
Financing and leasing assets | 6,876.9 | 7,041.8 | |||||||||
Non-Strategic Portfolios | |||||||||||
Assets held for sale | 162.1 | 210.1 | |||||||||
Financing and leasing assets | 162.1 | 210.1 | |||||||||
Total Loans | 29,691.4 | 29,535.9 | |||||||||
Total operating lease equipment, net | 7,516.2 | 7,486.1 | |||||||||
Total assets held for sale | 562.6 | 636.0 | |||||||||
Total financing and leasing assets | $ | 37,770.2 | $ | 37,658.0 |
Loans and Leases Composition (dollars in millions) | |||||||
March 31, 2018 | December 31, 2017 | ||||||
Commercial Banking | |||||||
Commercial Finance | |||||||
Loans | $ | 9,926.1 | $ | 9,928.8 | |||
Assets held for sale | 88.1 | 123.5 | |||||
Total loans and leases | 10,014.2 | 10,052.3 | |||||
Rail | |||||||
Loans | 81.5 | 82.8 | |||||
Operating lease equipment, net | 6,268.4 | 6,260.9 | |||||
Assets held for sale | 1,256.5 | 1,188.5 | |||||
Total loans and leases | 7,606.4 | 7,532.2 | |||||
Real Estate Finance | |||||||
Loans | 5,594.5 | 5,567.9 | |||||
Assets held for sale | 28.0 | 22.3 | |||||
Total loans and leases | 5,622.5 | 5,590.2 | |||||
Business Capital | |||||||
Loans | 7,743.8 | 7,579.8 | |||||
Operating lease equipment, net | 506.5 | 478.0 | |||||
Assets held for sale | 3.7 | — | |||||
Total loans and leases | 8,254.0 | 8,057.8 | |||||
Total Segment - Commercial Banking | |||||||
Loans | 23,345.9 | 23,159.3 | |||||
Operating lease equipment, net | 6,774.9 | 6,738.9 | |||||
Assets held for sale | 1,376.3 | 1,334.2 | |||||
Total loans and leases | 31,497.1 | 31,232.4 | |||||
Consumer Banking | |||||||
Legacy Consumer Mortgages | |||||||
Loans | 3,203.0 | 3,331.1 | |||||
Assets held for sale | 860.5 | 861.0 | |||||
Total loans | 4,063.5 | 4,192.1 | |||||
Other Consumer Banking | |||||||
Loans | 2,904.7 | 2,623.5 | |||||
Assets held for sale | 3.5 | 4.6 | |||||
Total loans | 2,908.2 | 2,628.1 | |||||
Total Segment - Consumer Banking | |||||||
Loans | 6,107.7 | 5,954.6 | |||||
Assets held for sale | 864.0 | 865.6 | |||||
Total loans | 6,971.7 | 6,820.2 | |||||
Non-Strategic Portfolios | |||||||
Assets held for sale | 58.5 | 63.3 | |||||
Total loans and leases | 58.5 | 63.3 | |||||
Total Loans | $ | 29,453.6 | $ | 29,113.9 | |||
Total operating lease equipment, net | 6,774.9 | 6,738.9 | |||||
Total assets held for sale | 2,298.8 | 2,263.1 | |||||
Total loans and leases | $ | 38,527.3 | $ | 38,115.9 |
leasing assets (“FLA”) of $37.8leases were $38.5 billion wereat March 31, 2018, up slightly1.1% from December 31, 2016,2017, as an increaseincreases in Commercial Banking drivenand in Other Consumer Banking were partially offset by higher factoring receivables, offset the run-off of the LCM portfolios in the Consumer Banking segment and a legacy real estate portfolio in NSP.Real Estate Finance.
Commercial Banking | Consumer Banking | Non- Strategic Portfolios | Total | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at December 31, 2016 | $ | 30,406.1 | $ | 7,041.8 | $ | 210.1 | $ | 37,658.0 | ||||||||||
New business volume (includes certain portfolio purchases) | 1,615.4 | 154.7 | – | 1,770.1 | ||||||||||||||
Loan and portfolio sales | (126.9 | ) | (44.9 | ) | – | (171.8 | ) | |||||||||||
Equipment sales | (33.0 | ) | – | (17.9 | ) | (50.9 | ) | |||||||||||
Depreciation | (73.5 | ) | – | – | (73.5 | ) | ||||||||||||
Gross charge-offs | (32.4 | ) | (0.6 | ) | – | (33.0 | ) | |||||||||||
Collections and other | (1,024.5 | ) | (274.1 | ) | (30.1 | ) | (1,328.7 | ) | ||||||||||
Balance at March 31, 2017 | $ | 30,731.2 | $ | 6,876.9 | $ | 162.1 | $ | 37,770.2 |
Changes in Loans and Leases (dollars in millions) | |||||||||||||||
Commercial Banking | Consumer Banking | Non- Strategic Portfolios | Total | ||||||||||||
Balance at December 31, 2017 | $ | 31,232.4 | $ | 6,820.2 | $ | 63.3 | $ | 38,115.9 | |||||||
New business volume | 2,267.2 | 388.6 | — | 2,655.8 | |||||||||||
Loan and portfolio sales | (79.1 | ) | (19.0 | ) | — | (98.1 | ) | ||||||||
Equipment sales | (46.5 | ) | — | (0.2 | ) | (46.7 | ) | ||||||||
Depreciation | (76.4 | ) | — | — | (76.4 | ) | |||||||||
Gross charge-offs | (54.6 | ) | (0.5 | ) | — | (55.1 | ) | ||||||||
Collections and other | (1,745.9 | ) | (217.6 | ) | (4.6 | ) | (1,968.1 | ) | |||||||
Balance at March 31, 2018 | $ | 31,497.1 | $ | 6,971.7 | $ | 58.5 | $ | 38,527.3 |
Quarters Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||||||
Commercial Banking | $ | 1,615.4 | $ | 2,042.2 | $ | 1,777.0 | |||||||||
Consumer Banking | 154.7 | 198.5 | 214.5 | ||||||||||||
Non-Strategic Portfolios | – | – | 44.3 | ||||||||||||
Total | $ | 1,770.1 | $ | 2,240.7 | $ | 2,035.8 |
New Business and Factoring Volume (dollars in millions) | |||||||||||
Quarters Ended | |||||||||||
March 31, 2018 | December 31, 2017 | March 31, 2017 | |||||||||
Commercial Banking | $ | 2,267.2 | $ | 2,902.0 | $ | 1,615.4 | |||||
Consumer Banking | 388.6 | 421.9 | 154.7 | ||||||||
Total | $ | 2,655.8 | $ | 3,323.9 | $ | 1,770.1 | |||||
Factoring volume | $ | 7,426.0 | $ | 7,731.2 | $ | 6,811.6 |
Quarters Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||||||
Commercial Banking | $ | 126.9 | $ | 40.6 | $ | 83.4 | |||||||||
Consumer Banking | 44.9 | 16.0 | 10.6 | ||||||||||||
Non-Strategic Portfolios | – | 697.2 | 20.1 | ||||||||||||
Total | $ | 171.8 | $ | 753.8 | $ | 114.1 |
Loan and Portfolio Sales (dollars in millions) | |||||||||||
Quarters Ended | |||||||||||
March 31, 2018 | December 31, 2017 | March 31, 2017 | |||||||||
Commercial Banking | $ | 79.1 | $ | 38.8 | $ | 126.9 | |||||
Consumer Banking | 19.0 | 26.8 | 44.9 | ||||||||
Total | $ | 98.1 | $ | 65.6 | $ | 171.8 |
Quarters Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||||||
Commercial Banking | $ | 33.0 | $ | 62.6 | $ | 49.3 | |||||||||
Non-Strategic Portfolios | 17.9 | 39.2 | 10.5 | ||||||||||||
Total | $ | 50.9 | $ | 101.8 | $ | 59.8 |
Equipment Sales (dollars in millions) | |||||||||||
Quarters Ended | |||||||||||
March 31, 2018 | December 31, 2017 | March 31, 2017 | |||||||||
Commercial Banking | $ | 46.5 | $ | 57.3 | $ | 33.0 | |||||
Non-Strategic Portfolios | 0.2 | 2.3 | 17.9 | ||||||||
Total | $ | 46.7 | $ | 59.6 | $ | 50.9 |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
West | $ | 11,812.0 | 31.3 | % | $ | 11,858.7 | 31.5 | % | |||||||||||
Northeast | 9,205.6 | 24.4 | % | 9,766.0 | 25.9 | % | |||||||||||||
Midwest | 4,570.0 | 12.1 | % | 4,241.9 | 11.3 | % | |||||||||||||
Southwest | 4,132.7 | 10.9 | % | 4,112.8 | 10.9 | % | |||||||||||||
Southeast | 3,604.2 | 9.5 | % | 3,299.5 | 8.8 | % | |||||||||||||
Total U.S. | 33,324.5 | 88.2 | % | 33,278.9 | 88.4 | % | |||||||||||||
Canada | 1,351.1 | 3.6 | % | 1,199.8 | 3.2 | % | |||||||||||||
Europe | 1,143.3 | 3.0 | % | 1,154.5 | 3.1 | % | |||||||||||||
Asia / Pacific | 1,022.2 | 2.7 | % | 1,100.1 | 2.9 | % | |||||||||||||
All other countries | 929.1 | 2.5 | % | 924.7 | 2.4 | % | |||||||||||||
Total | $ | 37,770.2 | 100.0 | % | $ | 37,658.0 | 100.0 | % |
Total Loans and Leases by Geographic Region (dollars in millions) | |||||||||||||
March 31, 2018 | December 31, 2017 | ||||||||||||
West | $ | 12,121.2 | 31.5 | % | $ | 12,009.8 | 31.5 | % | |||||
Northeast | 9,671.8 | 25.1 | % | 9,658.7 | 25.3 | % | |||||||
Midwest | 4,669.1 | 12.1 | % | 4,641.1 | 12.2 | % | |||||||
Southwest | 4,302.5 | 11.2 | % | 4,063.5 | 10.7 | % | |||||||
Southeast | 3,469.2 | 9.0 | % | 3,346.0 | 8.8 | % | |||||||
Total U.S. | 34,233.8 | 88.9 | % | 33,719.1 | 88.5 | % | |||||||
Europe | 1,491.6 | 3.9 | % | 1,444.1 | 3.8 | % | |||||||
Canada | 1,231.8 | 3.2 | % | 1,326.4 | 3.4 | % | |||||||
Asia / Pacific | 631.3 | 1.6 | % | 720.8 | 1.9 | % | |||||||
All other countries | 938.8 | 2.4 | % | 905.5 | 2.4 | % | |||||||
Total | $ | 38,527.3 | 100.0 | % | $ | 38,115.9 | 100.0 | % |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Northeast | $ | 8,099.0 | 25.9 | % | $ | 8,643.0 | 27.9 | % | |||||||||||
West | 7,208.4 | 23.1 | % | 7,168.7 | 23.1 | % | |||||||||||||
Midwest | 4,362.8 | 14.0 | % | 4,027.8 | 13.0 | % | |||||||||||||
Southwest | 4,037.7 | 12.9 | % | 4,016.7 | 12.9 | % | |||||||||||||
Southeast | 3,108.2 | 9.9 | % | 2,789.3 | 9.0 | % | |||||||||||||
Total U.S. | 26,816.1 | 85.8 | % | 26,645.5 | 85.9 | % | |||||||||||||
Canada | 1,351.1 | 4.3 | % | 1,199.8 | 3.9 | % | |||||||||||||
Europe | 1,143.3 | 3.7 | % | 1,154.5 | 3.7 | % | |||||||||||||
Asia / Pacific | 1,022.2 | 3.3 | % | 1,100.1 | 3.5 | % | |||||||||||||
All other countries | 929.1 | 3.0 | % | 924.7 | 3.0 | % | |||||||||||||
Total | $ | 31,261.8 | 100.0 | % | $ | 31,024.6 | 100.0 | % |
Commercial Loans and Leases by Obligor - Geographic Region (dollars in millions) | |||||||||||||
March 31, 2018 | December 31, 2017 | ||||||||||||
Northeast | $ | 8,675.5 | 27.1 | % | $ | 8,646.1 | 27.3 | % | |||||
West | 7,317.5 | 22.9 | % | 7,349.9 | 23.2 | % | |||||||
Midwest | 4,480.2 | 14.0 | % | 4,448.7 | 14.0 | % | |||||||
Southwest | 4,207.1 | 13.1 | % | 3,970.2 | 12.5 | % | |||||||
Southeast | 3,024.9 | 9.5 | % | 2,902.5 | 9.2 | % | |||||||
Total U.S. | 27,705.2 | 86.6 | % | 27,317.4 | 86.2 | % | |||||||
Europe | 1,491.6 | 4.7 | % | 1,444.1 | 4.5 | % | |||||||
Canada | 1,231.8 | 3.8 | % | 1,326.4 | 4.2 | % | |||||||
Asia / Pacific | 631.3 | 2.0 | % | 720.8 | 2.2 | % | |||||||
All other countries | 938.8 | 2.9 | % | 905.5 | 2.9 | % | |||||||
Total | $ | 31,998.7 | 100.0 | % | $ | 31,714.2 | 100.0 | % |
leases:
March 31, 2017 | December 31, 2016 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
State | |||||||||||||||||||
California | $ | 5,327.8 | 17.1 | % | $ | 5,220.8 | 16.8 | % | |||||||||||
Texas | 3,321.0 | 10.6 | % | 3,296.3 | 10.6 | % | |||||||||||||
New York | 2,969.4 | 9.5 | % | 3,084.0 | 10.0 | % | |||||||||||||
All other states | 15,197.9 | 48.6 | % | 15,044.4 | 48.5 | % | |||||||||||||
Total U.S. | $ | 26,816.1 | 85.8 | % | $ | 26,645.5 | 85.9 | % | |||||||||||
Country | |||||||||||||||||||
Canada | $ | 1,351.1 | 4.3 | % | $ | 1,199.8 | 3.9 | % | |||||||||||
Marshall Islands | 598.2 | 1.9 | % | 632.2 | 2.0 | % | |||||||||||||
All other countries | 2,496.4 | 8.0 | % | 2,547.1 | 8.2 | % | |||||||||||||
Total International | $ | 4,445.7 | 14.2 | % | $ | 4,379.1 | 14.1 | % |
Commercial Loans and Leases by Obligor - State and Country (dollars in millions) | |||||||||||||
March 31, 2018 | December 31, 2017 | ||||||||||||
State | |||||||||||||
California | $ | 5,490.2 | 17.2 | % | $ | 5,430.5 | 17.1 | % | |||||
Texas | 3,439.1 | 10.7 | % | 3,223.7 | 10.2 | % | |||||||
New York | 3,416.6 | 10.7 | % | 3,195.7 | 10.1 | % | |||||||
All other states | 15,359.3 | 48.0 | % | 15,467.5 | 48.8 | % | |||||||
Total U.S. | 27,705.2 | 86.6 | % | 27,317.4 | 86.2 | % | |||||||
Country | |||||||||||||
Canada | 1,231.8 | 3.8 | % | 1,326.4 | 4.2 | % | |||||||
France | 402.6 | 1.3 | % | 383.8 | 1.2 | % | |||||||
Marshall Islands | 392.3 | 1.2 | % | 442.5 | 1.4 | % | |||||||
All other countries | 2,266.8 | 7.1 | % | 2,244.1 | 7.0 | % | |||||||
Total International | $ | 4,293.5 | 13.4 | % | $ | 4,396.8 | 13.8 | % |
Commercial Loans and Leases by Obligor - Industry (dollars in millions) | Commercial Loans and Leases by Obligor - Industry (dollars in millions) | |||||||||||||||||||||||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2018 | December 31, 2017 | |||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Real Estate | $ | 5,068.4 | 16.2 | % | $ | 4,988.5 | 16.1 | % | $ | 5,243.7 | 16.4 | % | $ | 5,224.8 | 16.5 | % | ||||||||||||||||
Manufacturing(1) | 4,749.5 | 15.2 | % | 4,478.7 | 14.4 | % | 4,739.0 | 14.8 | % | 4,729.8 | 14.9 | % | ||||||||||||||||||||
Retail(2) | 2,533.1 | 8.1 | % | 2,296.3 | 7.4 | % | 2,564.2 | 8.0 | % | 2,531.2 | 8.0 | % | ||||||||||||||||||||
Wholesale | 2,240.5 | 7.2 | % | 2,178.2 | 7.0 | % | 2,260.6 | 7.1 | % | 2,343.7 | 7.4 | % | ||||||||||||||||||||
Energy and utilities | 2,240.5 | 7.2 | % | 2,224.4 | 7.2 | % | 2,255.3 | 7.0 | % | 2,253.3 | 7.1 | % | ||||||||||||||||||||
Rail | 1,776.3 | 5.7 | % | 2,088.5 | 6.7 | % | 1,903.1 | 5.9 | % | 1,916.7 | 6.1 | % | ||||||||||||||||||||
Maritime | 1,604.2 | 5.1 | % | 1,660.2 | 5.4 | % | ||||||||||||||||||||||||||
Oil and gas extraction / services | 1,550.9 | 4.9 | % | 1,437.6 | 4.5 | % | ||||||||||||||||||||||||||
Service industries | 1,534.9 | 4.8 | % | 1,464.5 | 4.6 | % | ||||||||||||||||||||||||||
Business Services | 1,514.4 | 4.8 | % | 1,424.0 | 4.6 | % | 1,512.9 | 4.7 | % | 1,559.0 | 4.9 | % | ||||||||||||||||||||
Service industries | 1,447.3 | 4.6 | % | 1,533.7 | 4.9 | % | ||||||||||||||||||||||||||
Oil and gas extraction / services | 1,333.3 | 4.3 | % | 1,516.7 | 4.9 | % | ||||||||||||||||||||||||||
Healthcare | 1,282.3 | 4.1 | % | 1,325.3 | 4.3 | % | 1,510.6 | 4.7 | % | 1,458.0 | 4.6 | % | ||||||||||||||||||||
Finance and insurance | 1,215.0 | 3.9 | % | 698.6 | 2.3 | % | 1,328.8 | 4.2 | % | 1,183.8 | 3.7 | % | ||||||||||||||||||||
Maritime | 1,290.8 | 4.0 | % | 1,341.8 | 4.2 | % | ||||||||||||||||||||||||||
Transportation | 780.5 | 2.5 | % | 809.5 | 2.6 | % | 833.3 | 2.6 | % | 810.7 | 2.6 | % | ||||||||||||||||||||
Other (no industry greater than 2%) | 3,476.5 | 11.1 | % | 3,802.0 | 12.2 | % | 3,470.6 | 10.9 | % | 3,459.3 | 10.9 | % | ||||||||||||||||||||
Total | $ | 31,261.8 | 100.0 | % | $ | 31,024.6 | 100.0 | % | $ | 31,998.7 | 100.0 | % | $ | 31,714.2 | 100.0 | % |
(1) | At March 31, |
(2) | At March 31, |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net Investment | % of Total | Net Investment | % of Total | ||||||||||||||||
Single family residential | $ | 5,388.6 | 82.8 | % | $ | 5,501.6 | 82.9 | % | |||||||||||
Reverse mortgage | 900.0 | 13.8 | % | 891.8 | 13.4 | % | |||||||||||||
Home Equity Lines of Credit | 219.6 | 3.4 | % | 237.1 | 3.6 | % | |||||||||||||
Other consumer | 0.2 | – | 2.9 | – | |||||||||||||||
Total loans | $ | 6,508.4 | 100.0 | % | $ | 6,633.4 | 100.0 | % |
Consumer Loans (dollars in millions) | |||||||||||||
March 31, 2018 | December 31, 2017 | ||||||||||||
Net Investment | % of Total | Net Investment | % of Total | ||||||||||
Single family residential | $ | 5,534.8 | 84.8 | % | $ | 5,390.3 | 84.2 | % | |||||
Reverse mortgage | 860.5 | 13.2 | % | 861.0 | 13.4 | % | |||||||
Home Equity Lines of Credit | 132.5 | 2.0 | % | 149.6 | 2.4 | % | |||||||
Other consumer | 0.8 | – | 0.8 | — | |||||||||
Total loans | $ | 6,528.6 | 100.0 | % | $ | 6,401.7 | 100.0 | % |
address.
Consumer Loans Geographic Concentrations (dollars in millions) | Consumer Loans Geographic Concentrations (dollars in millions) | |||||||||||||||||||||||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2018 | December 31, 2017 | |||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net Investment | % of Total | Net Investment | % of Total | Net Investment | % of Total | Net Investment | % of Total | |||||||||||||||||||||||||
California | $ | 4,140.4 | 63.6 | % | $ | 4,217.0 | 63.6 | % | $ | 4,373.7 | 67.0 | % | $ | 4,230.7 | 66.1 | % | ||||||||||||||||
New York | 521.8 | 8.0 | % | 524.0 | 7.9 | % | 467.5 | 7.2 | % | 479.8 | 7.5 | % | ||||||||||||||||||||
Florida | 275.6 | 4.2 | % | 282.7 | 4.3 | % | 250.0 | 3.8 | % | 250.6 | 3.9 | % | ||||||||||||||||||||
New Jersey | 155.4 | 2.4 | % | 159.4 | 2.4 | % | 135.0 | 2.1 | % | 133.0 | 2.1 | % | ||||||||||||||||||||
Maryland | 133.9 | 2.1 | % | 137.7 | 2.1 | % | 120.3 | 1.8 | % | 122.4 | 1.9 | % | ||||||||||||||||||||
Other States and Territories(1) | 1,281.3 | 19.7 | % | 1,312.6 | 19.7 | % | 1,182.1 | 18.1 | % | 1,185.2 | 18.5 | % | ||||||||||||||||||||
$ | 6,508.4 | 100.0 | % | $ | 6,633.4 | 100.0 | % | $ | 6,528.6 | 100.0 | % | $ | 6,401.7 | 100.0 | % |
(1) | No state or territory has a total in excess of 2%. |
March 31, 2017 | December 31, 2016 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Tax credit investments and investments in unconsolidated subsidiaries | $ | 213.4 | $ | 220.2 | ||||||
Property, furniture and fixtures | 188.2 | 191.1 | ||||||||
Current and deferred federal and state tax assets | 101.1 | 201.3 | ||||||||
OREO and repossessed assets | 79.8 | 72.7 | ||||||||
Fair value of derivative financial instruments | 75.4 | 111.2 | ||||||||
Tax receivables, other than income taxes | 39.2 | 50.7 | ||||||||
Other counterparty receivables | 31.5 | 42.8 | ||||||||
Other(1),(2) | 347.3 | 350.4 | ||||||||
Total other assets | $ | 1,075.9 | $ | 1,240.4 |
Other Assets (dollars in millions) | |||||||
March 31, 2018 | December 31, 2017 | ||||||
Tax credit investments and Investments in Unconsolidated Subsidiaries | $ | 228.3 | $ | 247.6 | |||
Current and deferred federal and state tax assets | 204.2 | 205.2 | |||||
Counterparty receivables | 203.6 | 241.3 | |||||
Property, furniture and fixtures | 178.4 | 173.9 | |||||
Indemnification assets | 120.5 | 142.4 | |||||
Intangible assets | 107.0 | 113.0 | |||||
Other | 535.9 | 472.1 | |||||
Total other assets | $ | 1,577.9 | $ | 1,595.5 |
(1) | Other includes executive retirement plan and deferred compensation, prepaid expenses, accrued interest and dividends, servicing advances, OREO and other miscellaneous assets. |
Other Liabilities (dollars in millions) | |||||||
March 31, 2018 | December 31, 2017 | ||||||
Accrued expenses and accounts payable | $ | 538.4 | $ | 584.8 | |||
Current and deferred taxes payable | 215.1 | 204.3 | |||||
Fair value of derivative financial instruments | 104.3 | 87.5 | |||||
Accrued interest payable | 66.5 | 86.6 | |||||
Other liabilities | 414.6 | 473.9 | |||||
Total other liabilities | $ | 1,338.9 | $ | 1,437.1 |
March 31, 2017 | December 31, 2016 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Accrued expenses and accounts payable | $ | 483.1 | $ | 580.4 | ||||||
Current and deferred taxes payable | 265.4 | 250.6 | ||||||||
Accrued interest payable | 130.0 | 181.2 | ||||||||
Other(1) | 698.9 | 885.4 | ||||||||
Total other liabilities | $ | 1,577.4 | $ | 1,897.6 |
Other consists of liabilities for taxes other than income, fair value of derivative financial instruments, equipment maintenance reserves, cash collateral deposits and contingent liabilities and other miscellaneous liabilities. |
▪ | Net Interest Income Sensitivity (“NII Sensitivity”), which measures the net impact of hypothetical changes in interest rates on forecasted net interest revenue and rental income assuming a static balance sheet over a twelve month period; and |
▪ | Economic Value of EquitySensitivity (“ |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
+100 bps | –100 bps | +100 bps | –100 bps | ||||||||||||||||
NII Sensitivity | 3.1 | % | (2.9 | )% | 3.2 | % | (2.4 | )% | |||||||||||
EVE | (2.6 | )% | 2.9 | % | (2.1 | )% | 2.3 | % |
March 31, 2018 | December 31, 2017 | ||||||||||
+200 bps | +100 bps | –100 bps | +200 bps | +100 bps | –100 bps | ||||||
NII Sensitivity | 6.8% | 3.5% | (3.9)% | 6.1% | 3.0% | (3.0)% | |||||
EVE Sensitivity | (3.4)% | (1.7)% | 1.4% | (4.4)% | (2.3)% | 2.3% |
March 31, 2017 | December 31, 2016 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Available-for-sale securities | ||||||||||
Debt securities | $ | 3,696.8 | $ | 3,674.1 | ||||||
Equity securities | 34.2 | 34.1 | ||||||||
Held-to-maturity securities | ||||||||||
Debt securities | 226.9 | 243.0 | ||||||||
Securities carried at fair value with changes recorded in net income | ||||||||||
Debt securities | 268.9 | 283.5 | ||||||||
Non-marketable investments | 249.5 | 256.4 | ||||||||
Total investment securities | $ | 4,476.3 | $ | 4,491.1 |
▪ | A multi-year committed |
▪ | Committed securitization facilities and secured bank lines totaled |
March 31, 2017 | December 31, 2016 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Deposits | 69 | % | 68 | % | ||||||
Unsecured | 22 | % | 23 | % | ||||||
Secured Borrowings: | ||||||||||
Structured financings | 4 | % | 4 | % | ||||||
FHLB Advances | 5 | % | 5 | % |
DepositsSee Net Finance Revenue section for a tabular presentation of our average funding mix for the quarter ended March 31, 2018, which was unchanged from the quarter ended December 31, 2017.
March 31, 2017 | December 31, 2016 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total | Percent of Total | Total | Percent of Total | ||||||||||||||||
Branch deposits | $ | 11,481.7 | 35 | % | $ | 11,797.4 | 36 | % | |||||||||||
Online deposits | 11,821.5 | 37 | % | 11,045.1 | 34 | % | |||||||||||||
Brokered deposits | 4,957.0 | 15 | % | 5,054.7 | 16 | % | |||||||||||||
Commercial deposits | 4,076.0 | 13 | % | 4,407.1 | 14 | % | |||||||||||||
Total deposits | $ | 32,336.2 | 100 | % | $ | 32,304.3 | 100 | % |
Deposits by Channel (dollars in millions) | |||||||||||||
March 31, 2018 | December 31, 2017 | ||||||||||||
Total | Percent of Total | Total | Percent of Total | ||||||||||
Online | $ | 13,227.6 | 44 | % | $ | 11,756.6 | 40 | % | |||||
Branch | 11,687.8 | 38 | % | 11,665.2 | 39 | % | |||||||
Brokered | 3,442.8 | 11 | % | 3,618.3 | 12 | % | |||||||
Commercial | 2,235.7 | 7 | % | 2,529.2 | 9 | % | |||||||
Total | $ | 30,593.9 | 100 | % | $ | 29,569.3 | 100 | % |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total | Percent of Total | Total | Percent of Total | ||||||||||||||||
Checking and Savings: | |||||||||||||||||||
Non-interest bearing checking | $ | 1,203.8 | 3.7 | % | $ | 1,255.6 | 3.9 | % | |||||||||||
Interest bearing checking | 3,237.4 | 10.0 | % | 3,251.8 | 10.1 | % | |||||||||||||
Money market / Sweeps(1) | 6,903.3 | 21.3 | % | 6,593.3 | 20.4 | % | |||||||||||||
Savings | 4,682.8 | 14.5 | % | 4,303.0 | 13.3 | % | |||||||||||||
Certificates of Deposits | 16,131.0 | 49.9 | % | 16,729.0 | 51.8 | % | |||||||||||||
Other | 177.9 | 0.6 | % | 171.6 | 0.5 | % | |||||||||||||
Total | $ | 32,336.2 | 100.0 | % | $ | 32,304.3 | 100.0 | % |
|
BorrowingsNotes
March 31, 2017 | December 31, 2016 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Total borrowing capacity | $ | 5,247.8 | $ | 5,462.4 | ||||||
Less: | ||||||||||
Advances | (2,410.7 | ) | (2,410.8 | ) | ||||||
Letters of credit | (865.4 | ) | (758.3 | ) | ||||||
Remaining capacity | $ | 1,971.7 | $ | 2,293.3 | ||||||
Weighted average rate | 1.33 | % | 1.18 | % | ||||||
Pledged assets | $ | 6,230.1 | $ | 6,389.7 |
FHLB Balances (dollars in millions) | |||||||
March 31, 2018 | December 31, 2017 | ||||||
Total borrowing capacity | $ | 5,334.2 | $ | 5,217.8 | |||
Less: | |||||||
Advances | (3,894.5 | ) | (3,695.5 | ) | |||
Letters of credit | (85.8 | ) | (87.8 | ) | |||
Available capacity | $ | 1,353.9 | $ | 1,434.5 | |||
Weighted average rate | 2.04 | % | 1.56 | % | |||
Pledged assets | $ | 6,338.6 | $ | 6,154.1 |
Ratings | ||||||||||||||||||||||||||
S&P | Fitch | Moody’s | DBRS | |||||||||||||||||||||||
Last Credit Update | 3/14/18 | 1/10/18 | 4/2/18 | 4/4/18 | ||||||||||||||||||||||
CIT Group Inc. | ||||||||||||||||||||||||||
Issuer | BB+ | BB+ | N/A | BB | ||||||||||||||||||||||
BB+ | BB+ | Ba2 | BB | |||||||||||||||||||||||
Short Term Instruments | B | B | NR | R-4 | ||||||||||||||||||||||
Revolving Credit Facility Rating | N/A | BB+ | Ba2 | BBB (low) | ||||||||||||||||||||||
Subordinated Debt | BB | BB | Ba2 | BB | ||||||||||||||||||||||
Non-Cumulative Perpetual Stock | B+ | B | B1 | B(high) | ||||||||||||||||||||||
Outlook | Stable | Stable | ||||||||||||||||||||||||
CIT Bank, N.A. | ||||||||||||||||||||||||||
Issuer Rating | BBB- | BB+ | Ba2 | BBB (low) | ||||||||||||||||||||||
Deposit Rating (LT/ST) | N/A | BBB-/F3 | Baa2/P-2 | |||||||||||||||||||||||
Outlook | Stable | Stable | Positive | Positive |
Commitment Expiration for the Twelve Months Ended March 31 (dollars in millions) | |||||||||||||||||||||||
Total | 2019 | 2020 | 2021 | 2022 | 2022+ | ||||||||||||||||||
Financing commitments | $ | 6,707.8 | $ | 2,018.1 | $ | 961.3 | $ | 1,182.3 | $ | 1,165.9 | $ | 1,380.2 | |||||||||||
Rail and other purchase commitments | 280.4 | 252.9 | 27.5 | — | — | — | |||||||||||||||||
Letters of credit | 258.9 | 46.1 | 47.9 | 33.8 | 73.4 | 57.7 | |||||||||||||||||
Deferred purchase agreements | 1,870.6 | 1,870.6 | — | — | — | — | |||||||||||||||||
Guarantees, acceptances and other recourse obligations | 2.1 | 2.1 | — | — | — | — | |||||||||||||||||
Liabilities for unrecognized tax benefits (1) | 13.2 | 1.0 | 12.2 | — | — | — | |||||||||||||||||
Total contractual commitments | $ | 9,133.0 | $ | 4,190.8 | $ | 1,048.9 | $ | 1,216.1 | $ | 1,239.3 | $ | 1,437.9 |
Total | 2018 | 2019 | 2020 | 2021 | 2022+ | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Structured financings(2) | $ | 1,736.6 | $ | 235.2 | $ | 210.9 | $ | 761.3 | $ | 75.3 | $ | 453.9 | ||||||||||||||
FHLB advances | 2,410.5 | 15.0 | 1,701.0 | 694.5 | – | – | ||||||||||||||||||||
Senior unsecured | 10,645.8 | 3,443.5 | 4,400.9 | – | 750.0 | 2,051.4 | ||||||||||||||||||||
Total Long-term borrowings | 14,792.9 | 3,693.7 | 6,312.8 | 1,455.8 | 825.3 | 2,505.3 | ||||||||||||||||||||
Deposits | 32,328.1 | 24,372.5 | 2,896.9 | 2,266.1 | 1,252.0 | 1,540.6 | ||||||||||||||||||||
Credit balances of factoring clients | 1,547.1 | 1,547.1 | – | – | – | – | ||||||||||||||||||||
Lease rental expense | 279.7 | 48.5 | 47.7 | 43.9 | 38.5 | 101.1 | ||||||||||||||||||||
Total contractual payments | $ | 48,947.8 | $ | 29,661.8 | $ | 9,257.4 | $ | 3,765.8 | $ | 2,115.8 | $ | 4,147.0 |
Total | 2018 | 2019 | 2020 | 2021 | 2022+ | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Financing commitments | $ | 6,221.0 | $ | 1,550.9 | $ | 756.7 | $ | 1,367.2 | $ | 1,047.2 | $ | 1,499.0 | ||||||||||||||
Aerospace purchase commitments(1) | 8,531.3 | 951.0 | 1,190.3 | 3,342.9 | 2,033.3 | 1,013.8 | ||||||||||||||||||||
Rail and other purchase commitments | 313.7 | 270.7 | 43.0 | – | – | – | ||||||||||||||||||||
Letters of credit | 272.3 | 61.5 | 36.0 | 49.9 | 38.2 | 86.7 | ||||||||||||||||||||
Deferred purchase agreements | 1,875.6 | 1,875.6 | – | – | – | – | ||||||||||||||||||||
Guarantees, acceptances and other recourse obligations | 1.1 | 1.1 | – | – | – | – | ||||||||||||||||||||
Liabilities for unrecognized tax obligations(2) | 35.5 | 20.0 | 15.5 | – | – | – | ||||||||||||||||||||
Total contractual commitments | $ | 17,250.5 | $ | 4,730.8 | $ | 2,041.5 | $ | 4,760.0 | $ | 3,118.7 | $ | 2,599.5 |
2018 Common Stock Dividends | ||||||||||||||
Declaration Date | Payment Date | Per Share Dividend | ||||||||||||
January 22, 2018 | February | $ | ||||||||||||
March 31, 2017 | December 31, 2016 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Transition Basis | Fully Phased-in Basis | Transition Basis | Fully Phased-in Basis | ||||||||||||||||
Tier 1 Capital | |||||||||||||||||||
Total common stockholders’ equity(1) | $ | 10,165.2 | $ | 10,165.2 | $ | 10,002.7 | $ | 10,002.7 | |||||||||||
Effect of certain items in accumulated other comprehensive loss excluded from Tier 1 Capital and qualifying noncontrolling interests | 75.3 | 75.3 | 79.1 | 79.1 | |||||||||||||||
Adjusted total equity | 10,240.5 | 10,240.5 | 10,081.8 | 10,081.8 | |||||||||||||||
Less: Goodwill(2),(3) | (733.2 | ) | (733.2 | ) | (733.1 | ) | (733.1 | ) | |||||||||||
Disallowed deferred tax assets | (140.6 | ) | (140.6 | ) | (213.7 | ) | (213.7 | ) | |||||||||||
Disallowed intangible assets(2),(3) | (87.3 | ) | (109.1 | ) | (68.3 | ) | (113.8 | ) | |||||||||||
Other Tier 1 components(4),(5) | (7.8 | ) | (19.4 | ) | (7.8 | ) | (17.5 | ) | |||||||||||
CET 1 Capital | 9,271.6 | 9,238.2 | 9,058.9 | 9,003.7 | |||||||||||||||
Tier 1 Capital | 9,271.6 | 9,238.2 | 9,058.9 | 9,003.7 | |||||||||||||||
Tier 2 Capital | |||||||||||||||||||
Qualifying reserve for credit losses and other reserves(6) | $ | 498.5 | $ | 498.5 | $ | 476.3 | $ | 476.3 | |||||||||||
Total qualifying capital | $ | 9,770.1 | $ | 9,736.7 | $ | 9,535.2 | $ | 9,480.0 | |||||||||||
Risk-weighted assets | $ | 64,330.0 | $ | 64,645.4 | $ | 64,586.3 | $ | 65,068.2 | |||||||||||
BHC Ratios | |||||||||||||||||||
CET 1 Capital Ratio | 14.4 | % | 14.3 | % | 14.0 | % | 13.8 | % | |||||||||||
Tier 1 Capital Ratio | 14.4 | % | 14.3 | % | 14.0 | % | 13.8 | % | |||||||||||
Total Capital Ratio | 15.2 | % | 15.1 | % | 14.8 | % | 14.6 | % | |||||||||||
Tier 1 Leverage Ratio | 14.8 | % | 14.7 | % | 13.9 | % | 13.9 | % | |||||||||||
CIT Bank, N.A. Ratios | |||||||||||||||||||
CET 1 Capital Ratio | 13.7 | % | 13.5 | % | 13.4 | % | 13.2 | % | |||||||||||
Tier 1 Capital Ratio | 13.7 | % | 13.5 | % | 13.4 | % | 13.2 | % | |||||||||||
Total Capital Ratio | 15.0 | % | 14.7 | % | 14.7 | % | 14.4 | % | |||||||||||
Tier 1 Leverage Ratio | 11.3 | % | 11.2 | % | 10.9 | % | 10.8 | % |
Capital Components, Risk-Weighted Assets, and Capital Ratios (dollars in millions, except ratios) | ||||||||||||
March 31, 2018 | December 31, 2017 | |||||||||||
Fully Phased-in Basis(5) | Transition Basis | Fully Phased-in Basis | ||||||||||
Common Equity Tier 1 (CET1) Capital | ||||||||||||
Total common stockholders’ equity(1) | $ | 6,801.8 | $ | 6,995.0 | $ | 6,995.0 | ||||||
Effect of certain items in AOCI excluded from CET1 Capital | 142.8 | 77.4 | 77.4 | |||||||||
Adjusted total equity | 6,944.6 | 7,072.4 | 7,072.4 | |||||||||
Goodwill, net of associated deferred tax liabilities (DTLs)(2) | (436.9 | ) | (436.0 | ) | (436.0 | ) | ||||||
Deferred tax assets (DTAs) arising from net operating loss and tax credit carryforwards | (98.9 | ) | (83.3 | ) | (104.2 | ) | ||||||
Intangible assets, net of associated DTLs(2) | (87.3 | ) | (73.3 | ) | (91.5 | ) | ||||||
Total CET1 Capital | 6,321.5 | 6,479.8 | 6,440.7 | |||||||||
Additional Tier 1 Capital | ||||||||||||
Preferred Stock | 325.0 | 325.0 | 325.0 | |||||||||
Other Additional Tier 1 Capital deductions(3) | (8.8 | ) | (29.4 | ) | (8.6 | ) | ||||||
Total Additional Tier 1 Capital | 316.2 | 295.6 | 316.4 | |||||||||
Total Tier 1 Capital | 6,637.7 | 6,775.4 | 6,757.1 | |||||||||
Tier 2 Capital | ||||||||||||
Qualifying Tier 2 Capital Instruments | 395.9 | — | — | |||||||||
Qualifying allowance for credit losses and other reserves(4) | 494.6 | 475.6 | 475.6 | |||||||||
Total Tier 2 Capital | 890.5 | 475.6 | 475.6 | |||||||||
Total Capital | $ | 7,528.2 | $ | 7,251.0 | $ | 7,232.7 | ||||||
Risk-Weighted Assets | $ | 44,777.8 | $ | 44,537.7 | $ | 44,687.1 | ||||||
CIT Ratios | ||||||||||||
CET1 Capital Ratio | 14.1 | % | 14.5 | % | 14.4 | % | ||||||
Tier 1 Capital Ratio | 14.8 | % | 15.2 | % | 15.1 | % | ||||||
Total Capital Ratio | 16.8 | % | 16.3 | % | 16.2 | % | ||||||
Tier 1 Leverage Ratio | 13.5 | % | 13.8 | % | 13.8 | % | ||||||
CIT Bank, N.A. Ratios | ||||||||||||
CET1 Capital Ratio | 13.6 | % | 13.8 | % | 13.7 | % | ||||||
Tier 1 Capital Ratio | 13.6 | % | 13.8 | % | 13.7 | % | ||||||
Total Capital Ratio | 14.9 | % | 15.0 | % | 15.0 | % | ||||||
Tier 1 Leverage Ratio | 11.6 | % | 11.8 | % | 11.8 | % |
(1) | See Consolidated Balance Sheets for the components of Total common stockholders’ equity. |
(2) | Goodwill and |
(3) |
(4) |
“Other reserves” represents additional credit loss reserves for unfunded lending commitments, letters of credit, and deferred purchase agreements, all of which are recorded in Other Liabilities. |
(5) | At March 31, 2018, the Transition Basis and the Fully Phased-in Basis were the same, as described in the paragraphs preceding this table. |
March 31, 2017 | December 31, 2016 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Balance sheet assets | $ | 63,094.4 | $ | 64,170.2 | ||||||
Risk weighting adjustments to balance sheet assets | (12,512.0 | ) | (13,241.6 | ) | ||||||
Off balance sheet items | 13,747.6 | 13,657.7 | ||||||||
Risk-weighted assets | $ | 64,330.0 | $ | 64,586.3 |
Risk-Weighted Assets (dollars in millions) | |||||||
March 31, 2018 | December 31, 2017 | ||||||
Balance sheet assets | $ | 51,542.5 | $ | 49,278.7 | |||
Risk weighting adjustments to balance sheet assets | (12,372.3 | ) | (10,230.4 | ) | |||
Off-Balance sheet items | 5,607.6 | 5,489.4 | |||||
Risk-Weighted Assets | $ | 44,777.8 | $ | 44,537.7 |
March 31, 2017 | December 31, 2016 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Total common stockholders’ equity | $ | 10,165.2 | $ | 10,002.7 | ||||||
Less: Goodwill | (686.1 | ) | (685.4 | ) | ||||||
Intangible assets | (134.3 | ) | (140.7 | ) | ||||||
Tangible book value | $ | 9,344.8 | $ | 9,176.6 | ||||||
Book value per share | $ | 50.14 | $ | 49.50 | ||||||
Tangible book value per share | $ | 46.09 | $ | 45.41 |
Tangible Book Value and per Share Amounts (dollars in millions, except per share amounts) | |||||||
March 31, 2018 | December 31, 2017 | ||||||
Total common stockholders’ equity | $ | 6,801.8 | $ | 6,995.0 | |||
Less: Goodwill | (369.9 | ) | (369.9 | ) | |||
Intangible assets | (107.0 | ) | (113.0 | ) | |||
Tangible book value(1) | $ | 6,324.9 | $ | 6,512.1 | |||
Book value per share | $ | 52.97 | $ | 53.25 | |||
Tangible book value per share(1) | $ | 49.25 | $ | 49.58 |
(1) | Tangible book value and tangible book value per share are non-GAAP measures. |
March 31, 2017 | December 31, 2016 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
ASSETS: | ||||||||||
Cash and deposits with banks | $ | 4,706.9 | $ | 4,647.2 | ||||||
Investment securities | 4,419.4 | 4,035.6 | ||||||||
Assets held for sale | 694.7 | 927.3 | ||||||||
Loans | 26,915.3 | 27,246.2 | ||||||||
Allowance for loan losses | (411.5 | ) | (406.6 | ) | ||||||
Operating lease equipment, net | 3,630.3 | 3,575.8 | ||||||||
Indemnification Assets | 313.1 | 341.4 | ||||||||
Goodwill | 490.9 | 490.9 | ||||||||
Intangible assets | 136.9 | 144.0 | ||||||||
Other assets | 747.8 | 780.6 | ||||||||
Assets of discontinued operations | 421.4 | 448.1 | ||||||||
Total Assets | $ | 42,065.2 | $ | 42,230.5 | ||||||
LIABILITIES AND EQUITY: | ||||||||||
Deposits | $ | 32,339.1 | $ | 32,309.1 | ||||||
FHLB advances | 2,410.7 | 2,410.8 | ||||||||
Borrowings | 176.5 | 241.4 | ||||||||
Other liabilities | 931.5 | 1,145.6 | ||||||||
Liabilities of discontinued operations | 922.1 | 935.8 | ||||||||
Total Liabilities | 36,779.9 | 37,042.7 | ||||||||
Total Equity | 5,285.3 | 5,187.8 | ||||||||
Total Liabilities and Equity | $ | 42,065.2 | $ | 42,230.5 |
March 31, 2018 | December 31, 2017 | ||||||
ASSETS: | |||||||
Cash and deposits with banks | $ | 3,395.4 | $ | 961.8 | |||
Securities purchased under agreement to resell | 150.0 | — | |||||
Investment securities | 5,897.4 | 6,455.9 | |||||
Assets held for sale | 1,138.3 | 1,170.5 | |||||
Loans | 26,636.2 | 26,427.9 | |||||
Allowance for loan losses | (418.9 | ) | (403.5 | ) | |||
Operating lease equipment, net | 3,803.3 | 3,765.5 | |||||
Bank owned life insurance | 795.1 | 788.6 | |||||
Goodwill | 323.1 | 323.1 | |||||
Other assets | 912.4 | 939.7 | |||||
Assets of discontinued operation | 298.7 | 317.1 | |||||
Total Assets | $ | 42,931.0 | $ | 40,746.6 | |||
LIABILITIES AND EQUITY: | |||||||
Deposits, including $1,575.9 and $475.8 deposits of affiliates at March 31, 2018 and December 31, 2017, respectively | $ | 32,171.1 | $ | 30,048.8 | |||
FHLB advances | 3,894.5 | 3,695.5 | |||||
Borrowings | — | 73.5 | |||||
Other liabilities, including $695.8 and $570.5 payables to affiliates at March 31, 2018 and December 31, 2017, respectively | 1,345.3 | 1,306.8 | |||||
Liabilities of discontinued operation | 476.5 | 500.5 | |||||
Total Liabilities | 37,887.4 | 35,625.1 | |||||
Total Equity | 5,043.6 | 5,121.5 | |||||
Total Liabilities and Equity | $ | 42,931.0 | $ | 40,746.6 |
March 31, 2018 | December 31, 2017 | ||||
Common Equity Tier 1 Capital | 13.6 | % | 13.7 | % | |
Tier 1 Capital Ratio | 13.6 | % | 13.7 | % | |
Total Capital Ratio | 14.9 | % | 15.0 | % | |
Tier 1 Leverage ratio | 11.6 | % | 11.8 | % |
March 31, 2017 | December 31, 2016 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Common Equity Tier 1 Capital | 13.5 | % | 13.2 | % | ||||||
Tier 1 Capital Ratio | 13.5 | % | 13.2 | % | ||||||
Total Capital Ratio | 14.7 | % | 14.4 | % | ||||||
Tier 1 Leverage ratio | 11.2 | % | 10.8 | % |
March 31, 2017 | December 31, 2016 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Commercial Banking | |||||||||||
Commercial Finance | $ | 10,252.5 | $ | 10,753.3 | |||||||
Real Estate Finance | 5,655.4 | 5,566.6 | |||||||||
Business Capital | 5,188.1 | 5,146.9 | |||||||||
Rail | 3,267.4 | 3,240.7 | |||||||||
Total | 24,363.4 | 24,707.5 | |||||||||
Consumer Banking | |||||||||||
Legacy Consumer Mortgages | 4,734.2 | 4,862.7 | |||||||||
Other Consumer Banking | 2,142.7 | 2,179.1 | |||||||||
Total | 6,876.9 | 7,041.8 | |||||||||
Total Financing and Leasing Assets | $ | 31,240.3 | $ | 31,749.3 |
(dollars in millions)March 31,
2018 December 31,
2017Commercial Banking Commercial Finance $ 10,161.0 $ 10,203.5 Real Estate Finance 5,622.5 5,590.2 Business Capital 5,495.1 5,429.9 Rail 3,327.5 3,320.1 Total 24,606.1 24,543.7 Consumer Banking Legacy Consumer Mortgages 4,063.5 4,192.1 Other Consumer Banking 2,908.2 2,628.1 Total 6,971.7 6,820.2 Total loans and leases, including assets held for sale $ 31,577.8 $ 31,363.9
Quarters Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||||||
Interest income | $ | 429.0 | $ | 450.9 | $ | 449.7 | |||||||||
Interest expense | (105.1 | ) | (107.2 | ) | (110.8 | ) | |||||||||
Net interest revenue | 323.9 | 343.7 | 338.9 | ||||||||||||
Provision for credit losses | (28.7 | ) | (32.6 | ) | (92.4 | ) | |||||||||
Net interest revenue, after credit provision | 295.2 | 311.1 | 246.5 | ||||||||||||
Rental income on operating leases | 108.3 | 104.0 | 92.2 | ||||||||||||
Other income | 77.1 | 62.0 | 46.3 | ||||||||||||
Total net revenue, net of interest expense and credit provision | 480.6 | 477.1 | 385.0 | ||||||||||||
Operating expenses | (260.7 | ) | (298.1 | ) | (267.4 | ) | |||||||||
Goodwill impairment | – | (319.4 | ) | – | |||||||||||
Depreciation on operating lease equipment | (46.4 | ) | (42.9 | ) | (36.7 | ) | |||||||||
Maintenance and other operating lease expenses | (8.1 | ) | (6.0 | ) | (2.6 | ) | |||||||||
Loss on debt extinguishment and deposit redemption | – | (3.3 | ) | – | |||||||||||
Income (loss) before provision for income taxes | 165.4 | (192.6 | ) | 78.3 | |||||||||||
Provision for income taxes | (60.9 | ) | (45.1 | ) | (24.3 | ) | |||||||||
Income (loss) from continuing operations | 104.5 | (237.7 | ) | 54.0 | |||||||||||
Loss on discontinued operations | (9.2 | ) | (9.1 | ) | (4.8 | ) | |||||||||
Net income (loss) | $ | 95.3 | $ | (246.8 | ) | $ | 49.2 | ||||||||
New business volume — funded | $ | 1,747.3 | $ | 2,194.0 | $ | 1,983.6 |
Quarters Ended | |||||||||||
March 31, 2018 | December 31, 2017 | March 31, 2017 | |||||||||
Interest income | $ | 428.0 | $ | 421.1 | $ | 429.0 | |||||
Interest expense | 120.1 | 110.2 | 105.1 | ||||||||
Net interest revenue | 307.9 | 310.9 | 323.9 | ||||||||
Provision for credit losses | 67.4 | 33.6 | 28.7 | ||||||||
Net interest revenue, after credit provision | 240.5 | 277.3 | 295.2 | ||||||||
Rental income on operating leases | 114.0 | 112.0 | 108.3 | ||||||||
Other non-interest income | 71.1 | 118.5 | 77.1 | ||||||||
Total net revenue, net of interest expense and credit provision | 425.6 | 507.8 | 480.6 | ||||||||
Goodwill Impairment | — | 167.8 | — | ||||||||
Operating expenses | 239.2 | 269.3 | 260.7 | ||||||||
Depreciation on operating lease equipment | 55.9 | 54.6 | 46.4 | ||||||||
Maintenance and other operating lease expenses | 4.0 | 8.0 | 8.1 | ||||||||
Income before provision for income taxes | 126.5 | 8.1 | 165.4 | ||||||||
Provision for income taxes | 33.5 | 64.1 | 60.9 | ||||||||
Income (loss) from continuing operations | 93.0 | (56.0 | ) | 104.5 | |||||||
Loss on discontinued operations | (7.0 | ) | (4.5 | ) | (9.2 | ) | |||||
Net income (loss) | $ | 86.0 | $ | (60.5 | ) | $ | 95.3 | ||||
New business volume — funded | $ | 2,625.4 | $ | 3,281.4 | $ | 1,747.3 |
Quarters Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||||||
Interest income | $ | 429.0 | $ | 450.9 | $ | 449.7 | |||||||||
Rental income on operating leases | 108.3 | 104.0 | 92.2 | ||||||||||||
Finance revenue | 537.3 | 554.9 | 541.9 | ||||||||||||
Interest expense | (105.1 | ) | (107.2 | ) | (110.8 | ) | |||||||||
Depreciation on operating lease equipment | (46.4 | ) | (42.9 | ) | (36.7 | ) | |||||||||
Maintenance and other operating lease expenses | (8.1 | ) | (6.0 | ) | (2.6 | ) | |||||||||
Net finance revenue (“NFR”) | $ | 377.7 | $ | 398.8 | $ | 391.8 | |||||||||
Average Earning Assets (“AEA”)* | $ | 40,510.9 | $ | 40,611.6 | $ | 41,546.1 |
Quarters Ended | |||||||||||
March 31, 2018 | December 31, 2017 | March 31, 2017 | |||||||||
Interest income | $ | 428.0 | $ | 421.1 | $ | 429.0 | |||||
Rental income on operating leases | 114.0 | 112.0 | 108.3 | ||||||||
Finance revenue | 542.0 | 533.1 | 537.3 | ||||||||
Interest expense | 120.1 | 110.2 | 105.1 | ||||||||
Depreciation on operating lease equipment | 55.9 | 54.6 | 46.4 | ||||||||
Maintenance and other operating lease expenses | 4.0 | 8.0 | 8.1 | ||||||||
NFR | $ | 362.0 | $ | 360.3 | $ | 377.7 | |||||
AEA | $ | 39,259.0 | $ | 38,466.4 | $ | 40,510.9 |
Revenue (dollars in millions) (continued)
Margin
Quarters Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||||||
As a % of AEA: | |||||||||||||||
Interest income | 4.24 | % | 4.44 | % | 4.33 | % | |||||||||
Rental income on operating leases | 1.07 | % | 1.02 | % | 0.89 | % | |||||||||
Finance revenue | 5.31 | % | 5.46 | % | 5.22 | % | |||||||||
Interest expense | (1.04 | )% | (1.06 | )% | (1.07 | )% | |||||||||
Depreciation on operating lease equipment | (0.46 | )% | (0.42 | )% | (0.35 | )% | |||||||||
Maintenance and other operating lease expenses | (0.08 | )% | (0.05 | )% | (0.03 | )% | |||||||||
Net finance margin (“NFM”) | 3.73 | % | 3.93 | % | 3.77 | % |
Quarters Ended | ||||||||
March 31, 2018 | December 31, 2017 | March 31, 2017 | ||||||
As a % of AEA: | ||||||||
Interest income | 4.36 | % | 4.38 | % | 4.24 | % | ||
Rental income on operating leases | 1.16 | % | 1.16 | % | 1.07 | % | ||
Finance revenue | 5.52 | % | 5.54 | % | 5.31 | % | ||
Interest expense | 1.22 | % | 1.15 | % | 1.04 | % | ||
Depreciation on operating lease equipment | 0.57 | % | 0.57 | % | 0.46 | % | ||
Maintenance and other operating lease expenses | 0.04 | % | 0.08 | % | 0.08 | % | ||
NFM | 3.69 | % | 3.74 | % | 3.73 | % |
▪ Allowance for Loan Losses |
▪ |
Liabilities for Uncertain Tax Positions |
▪ | ▪ Realizability of Deferred Tax Assets |
▪ | ▪ Contingent Liabilities |
▪ | ▪ Goodwill Assets |
AND AVERAGE BALANCE SHEETS
Select Data (dollars in millions) | |||||||||||
At or for the Quarters Ended | |||||||||||
March 31, 2018 | December 31, 2017 | March 31, 2017 | |||||||||
Select Statement of Operations Data | |||||||||||
Net interest revenue | $ | 270.7 | $ | 279.0 | $ | 292.6 | |||||
Provision for credit losses | 68.8 | 30.4 | 49.7 | ||||||||
Total non-interest income | 358.3 | 389.8 | 330.4 | ||||||||
Total non-interest expenses | 415.2 | 693.5 | 438.9 | ||||||||
Income (loss) from continuing operations, net of tax | 103.7 | (82.8 | ) | 78.2 | |||||||
Net income (loss) | 97.0 | (88.0 | ) | 179.9 | |||||||
Net income (loss) applicable to common shareholders | 97.0 | (97.8 | ) | 179.9 | |||||||
Per Common Share Data | |||||||||||
Diluted income per common share — continuing operations | $ | 0.79 | $ | (0.70 | ) | $ | 0.38 | ||||
Diluted income per common share | $ | 0.74 | $ | (0.74 | ) | $ | 0.88 | ||||
Book value per common share | $ | 52.97 | $ | 53.25 | $ | 50.14 | |||||
Tangible book value per common share | $ | 49.25 | $ | 49.58 | $ | 46.09 | |||||
Dividends declared per common share | $ | 0.16 | $ | 0.16 | $ | 0.15 | |||||
Dividend payout ratio | 21.6 | % | NM | 17.0 | % | ||||||
Performance Ratios | |||||||||||
Return (continuing operations) on average common stockholders' equity (ROATCE) | 6.83 | % | 8.42 | % | 5.36 | % | |||||
Return on average common stockholders' equity applicable to Common shareholders (ROE) | 6.09 | % | (5.29 | )% | 4.49 | % | |||||
Net finance revenue as a percentage of average earning assets | 3.45 | % | 3.59 | % | 3.57 | % | |||||
Return on Average Earning Assets applicable to Common Shareholders (ROA) | 0.92 | % | (0.83 | )% | 0.67 | % | |||||
Return (from continuing operations) on average continuing operations total assets | 0.87 | % | (0.70 | )% | 0.63 | % | |||||
Balance Sheet Data | |||||||||||
Loans including receivables pledged | $ | 29,453.6 | $ | 29,113.9 | $ | 29,691.4 | |||||
Allowance for loan losses | (447.6 | ) | (431.1 | ) | (448.6 | ) | |||||
Operating lease equipment, net | 6,774.9 | 6,738.9 | 7,516.2 | ||||||||
Goodwill | 369.9 | 369.9 | 686.1 | ||||||||
Total cash and deposits | 4,096.3 | 1,718.7 | 6,156.9 | ||||||||
Investment securities | 5,910.5 | 6,469.9 | 4,476.3 | ||||||||
Assets of discontinued operation | 463.1 | 501.3 | 12,718.2 | ||||||||
Total assets | 51,542.5 | 49,278.7 | 63,094.4 | ||||||||
Deposits | 30,593.9 | 29,569.3 | 32,336.2 | ||||||||
Borrowings | 10,437.3 | 8,974.4 | 14,736.3 | ||||||||
Liabilities of discontinued operation | 496.6 | 509.3 | 2,731.9 | ||||||||
Total common stockholders’ equity | 6,801.8 | 6,995.0 | 10,165.2 | ||||||||
Credit Quality | |||||||||||
Non-accrual loans as a percentage of loans | 0.80 | % | 0.76 | % | 0.87 | % | |||||
Net charge-offs as a percentage of average loans | 0.68 | % | 0.26 | % | 0.37 | % | |||||
Allowance for loan losses as a percentage of loans | 1.52 | % | 1.48 | % | 1.51 | % | |||||
Capital Ratios | |||||||||||
Total ending equity to total ending assets | 13.8 | % | 14.9 | % | 16.1 | % | |||||
CET1 Capital Ratio (fully phased-in) | 14.1 | % | 14.4 | % | 14.3 | % | |||||
Tier 1 Capital Ratio (fully phased-in) | 14.8 | % | 15.1 | % | 14.3 | % | |||||
Total Capital Ratio (fully phased-in) | 16.8 | % | 16.2 | % | 15.1 | % |
At or for the Quarters Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||||||
Select Statement of Operations Data | |||||||||||||||
Net interest revenue | $ | 292.6 | $ | 295.8 | $ | 287.9 | |||||||||
Provision for credit losses | (49.7 | ) | (36.7 | ) | (89.5 | ) | |||||||||
Total non-interest income | 330.4 | 134.6 | 348.9 | ||||||||||||
Total non-interest expenses | (438.9 | ) | (826.1 | ) | (441.9 | ) | |||||||||
Income (loss) from continuing operations, net of tax | 78.2 | (425.8 | ) | 61.0 | |||||||||||
Income (loss) from discontinued operation, net of tax | 101.7 | (716.7 | ) | 85.0 | |||||||||||
Net income (loss) | 179.9 | (1,142.5 | ) | 146.0 | |||||||||||
Per Common Share Data | |||||||||||||||
Diluted (loss) income per common share — continuing operations | $ | 0.38 | $ | (2.10 | ) | $ | 0.30 | ||||||||
Diluted (loss) income per common share | $ | 0.88 | $ | (5.65 | ) | $ | 0.72 | ||||||||
Book value per common share | $ | 50.14 | $ | 49.50 | $ | 54.99 | |||||||||
Tangible book value per common share | $ | 46.09 | $ | 45.41 | $ | 48.94 | |||||||||
Dividends declared per common share | $ | 0.15 | $ | 0.15 | $ | 0.15 | |||||||||
Dividend payout ratio | 17.0 | % | NM | 20.8 | % | ||||||||||
Performance Ratios | |||||||||||||||
Return (continuing operations) on average common stockholders’ equity | 3.09 | % | (15.51 | )% | 2.21 | % | |||||||||
Pre-tax Return (continuing operations) on average tangible common equity | 5.31 | % | (15.75 | )% | 3.81 | % | |||||||||
Adjusted return on tangible common equity | 7.40 | % | 8.37 | % | 4.03 | % | |||||||||
Net finance revenue as a percentage of average earning assets | 3.57 | % | 3.58 | % | 3.67 | % | |||||||||
Return on average earning assets | 0.67 | % | (3.63 | )% | 0.51 | % | |||||||||
Return on average continuing operations total assets | 0.62 | % | (3.26 | )% | 0.45 | % | |||||||||
Balance Sheet Data | |||||||||||||||
Loans including receivables pledged | $ | 29,691.4 | $ | 29,535.9 | $ | 30,948.7 | |||||||||
Allowance for loan losses | (448.6 | ) | (432.6 | ) | (400.8 | ) | |||||||||
Operating lease equipment, net | 7,516.2 | 7,486.1 | 7,071.4 | ||||||||||||
Goodwill | 686.1 | 685.4 | 1,060.0 | ||||||||||||
Total cash and deposits | 6,156.9 | 6,430.6 | 7,489.4 | ||||||||||||
Investment securities | 4,476.3 | 4,491.1 | 2,896.8 | ||||||||||||
Assets of discontinued operation | 12,718.2 | 13,220.7 | 12,951.7 | ||||||||||||
Total assets | 63,094.4 | 64,170.2 | 67,088.6 | ||||||||||||
Deposits | 32,336.2 | 32,304.3 | 32,877.8 | ||||||||||||
Borrowings | 14,736.3 | 14,935.5 | 15,981.6 | ||||||||||||
Liabilities of discontinued operation | 2,731.9 | 3,737.7 | 4,195.1 | ||||||||||||
Total common stockholders’ equity | 10,165.2 | 10,002.7 | 11,091.6 | ||||||||||||
Credit Quality | |||||||||||||||
Non-accrual loans as a percentage of finance receivables | 0.87 | % | 0.94 | % | 0.88 | % | |||||||||
Net charge-offs as a percentage of average finance receivables | 0.37 | % | 0.32 | % | 0.42 | % | |||||||||
Allowance for loan losses as a percentage of finance receivables | 1.51 | % | 1.46 | % | 1.30 | % | |||||||||
Capital Ratios | |||||||||||||||
Total ending equity to total ending assets | 16.1 | % | 15.6 | % | 16.5 | % | |||||||||
Common Equity Tier 1 Capital Ratio (fully phased-in) | 14.3 | % | 13.8 | % | 13.1 | % | |||||||||
Total Capital Ratio (fully phased-in) | 15.1 | % | 14.6 | % | 13.7 | % |
Average Balances and Rates(1) (dollars in millions)
Quarters Ended | ||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2017 | December 31, 2016 | March 31, 2016 | ||||||||||||||||||||||||||||||||||||
Average Balance | Revenue / Expense | Average Rate (%) | Average Balance | Revenue / Expense | Average Rate (%) | Average Balance | Revenue / Expense | Average Rate (%) | ||||||||||||||||||||||||||||||
Interest bearing deposits | $ | 5,652.4 | $ | 12.5 | 0.88 | % | $ | 5,918.2 | $ | 7.5 | 0.51 | % | $ | 6,863.2 | $ | 8.4 | 0.49 | % | ||||||||||||||||||||
Investment securities | 4,452.4 | 31.0 | 2.79 | % | 3,962.2 | 30.4 | 3.07 | % | 2,923.6 | 22.5 | 3.07 | % | ||||||||||||||||||||||||||
Loans (including held for sale)(2),(3) | ||||||||||||||||||||||||||||||||||||||
U.S.(2) | 29,742.0 | 403.4 | 5.71 | % | 29,940.4 | 425.7 | 5.94 | % | 30,981.5 | 428.7 | 5.78 | % | ||||||||||||||||||||||||||
Non-U.S. | 463.9 | 16.6 | 14.31 | % | 653.9 | 18.8 | 11.50 | % | 1,291.0 | 26.4 | 8.19 | % | ||||||||||||||||||||||||||
Total loans(2) | 30,205.9 | 420.0 | 5.85 | % | 30,594.3 | 444.5 | 6.07 | % | 32,272.5 | 455.1 | 5.88 | % | ||||||||||||||||||||||||||
Total interest earning assets / interest income(2),(3) | 40,310.7 | 463.5 | 4.78 | % | 40,474.7 | 482.4 | 4.93 | % | 42,059.3 | 486.0 | 4.77 | % | ||||||||||||||||||||||||||
Operating lease equipment, net (including held for sale)(4) | ||||||||||||||||||||||||||||||||||||||
U.S.(4) | 6,044.9 | 101.6 | 6.72 | % | 6,052.6 | 99.8 | 6.60 | % | 5,659.0 | 125.4 | 8.86 | % | ||||||||||||||||||||||||||
Non-U.S.(4) | 1,456.0 | 22.4 | 6.15 | % | 1,382.5 | 25.1 | 7.26 | % | 1,330.8 | 28.5 | 8.57 | % | ||||||||||||||||||||||||||
Total operating lease equipment, net(4) | 7,500.9 | 124.0 | 6.61 | % | 7,435.1 | 124.9 | 6.72 | % | 6,989.8 | 153.9 | 8.80 | % | ||||||||||||||||||||||||||
Indemnification assets | 327.9 | (7.8 | ) | (9.50 | )% | 351.3 | (8.3 | ) | (9.42 | )% | 395.5 | (3.1 | ) | (3.13 | )% | |||||||||||||||||||||||
Total earning assets(2) | 48,139.5 | $ | 579.7 | 4.97 | % | 48,261.1 | $ | 599.0 | 5.10 | % | 49,444.6 | $ | 636.8 | 5.29 | % | |||||||||||||||||||||||
Non interest earning assets | ||||||||||||||||||||||||||||||||||||||
Cash due from banks | 783.6 | 806.9 | 938.6 | |||||||||||||||||||||||||||||||||||
Allowance for loan losses | (436.0 | ) | (418.5 | ) | (361.1 | ) | ||||||||||||||||||||||||||||||||
All other non-interest earning assets | 2,321.3 | 3,603.1 | 4,285.5 | |||||||||||||||||||||||||||||||||||
Assets of discontinued operation | 12,969.7 | 13,140.4 | 12,979.4 | |||||||||||||||||||||||||||||||||||
Total Average Assets | $ | 63,778.1 | $ | 65,393.0 | $ | 67,287.0 | ||||||||||||||||||||||||||||||||
Average Liabilities | ||||||||||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||||||||||
Deposits | $ | 30,953.0 | $ | 94.0 | 1.21 | % | $ | 31,139.0 | $ | 96.4 | 1.24 | % | $ | 31,829.1 | $ | 99.5 | 1.25 | % | ||||||||||||||||||||
Borrowings(5) | 14,815.0 | 69.1 | 1.87 | % | 14,676.5 | 81.9 | 2.23 | % | 16,134.0 | 95.5 | 2.37 | % | ||||||||||||||||||||||||||
Total interest-bearing liabilities | 45,768.0 | 163.1 | 1.43 | % | 45,815.5 | 178.3 | 1.56 | % | 47,963.1 | 195.0 | 1.63 | % | ||||||||||||||||||||||||||
Non-interest bearing deposits | 1,387.3 | 1,295.0 | 1,062.4 | |||||||||||||||||||||||||||||||||||
Credit balances of factoring clients | 1,500.6 | 1,296.3 | 1,337.5 | |||||||||||||||||||||||||||||||||||
Other non-interest bearing liabilities | 1,778.8 | 1,822.7 | 1,626.1 | |||||||||||||||||||||||||||||||||||
Liabilities of discontinued operation | 3,223.6 | 4,180.0 | 4,246.2 | |||||||||||||||||||||||||||||||||||
Noncontrolling interests | 0.3 | 0.5 | 0.5 | |||||||||||||||||||||||||||||||||||
Stockholders’ equity | 10,119.5 | 10,983.0 | 11,051.2 | |||||||||||||||||||||||||||||||||||
Total Average Liabilities and Stockholders’ Equity | $ | 63,778.1 | $ | 65,393.0 | $ | 67,287.0 | ||||||||||||||||||||||||||||||||
Net revenue spread | 3.54 | % | 3.54 | % | 3.67 | % | ||||||||||||||||||||||||||||||||
Impact of non-interest bearing sources | 0.03 | % | 0.04 | % | 0.00 | % | ||||||||||||||||||||||||||||||||
Net revenue/yield on earning assets(2) | $ | 416.6 | 3.57 | % | $ | 420.7 | 3.58 | % | $ | 441.8 | 3.67 | % |
1. | Total Net Revenue, Net Finance Revenue, |
Quarters Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||||||
Total Net Revenue | |||||||||||||||
Interest income(1) | $ | 455.7 | $ | 474.1 | $ | 482.9 | |||||||||
Rental income on operating leases(1) | 251.3 | 252.2 | 264.1 | ||||||||||||
Finance revenue | 707.0 | 726.3 | 747.0 | ||||||||||||
Interest expense(1) | (163.1 | ) | (178.3 | ) | (195.0 | ) | |||||||||
Depreciation on operating lease equipment(1) | (73.5 | ) | (69.8 | ) | (61.3 | ) | |||||||||
Maintenance and other operating lease expenses(1) | (53.8 | ) | (57.5 | ) | (48.9 | ) | |||||||||
Net finance revenue | 416.6 | 420.7 | 441.8 | ||||||||||||
Other income(1) | 79.1 | (117.6 | ) | 84.8 | |||||||||||
Total net revenue | $ | 495.7 | $ | 303.1 | $ | 526.6 | |||||||||
NFM (NFR as a % of AEA) | 3.57 | % | 3.58 | % | 3.67 | % | |||||||||
Net Operating Lease Revenue | |||||||||||||||
Rental income on operating leases(1) | $ | 251.3 | $ | 252.2 | $ | 264.1 | |||||||||
Depreciation on operating lease equipment(1) | (73.5 | ) | (69.8 | ) | (61.3 | ) | |||||||||
Maintenance and other operating lease expenses(1) | (53.8 | ) | (57.5 | ) | (48.9 | ) | |||||||||
Net operating lease revenue | $ | 124.0 | $ | 124.9 | $ | 153.9 |
|
2. 2. Operating Expenses and Net Efficiency Ratio, Excluding Certain Costs Oneaverage earning assets.AEA. A decline in this metric could show improvement, i.e. expenses not going up at the same rate of asset growth, or decreasing at a rate in excess of asset decline. Operating expenses excluding restructuring costs and intangible asset amortization is a non-GAAP measure used by management to compare period over period expenses. Another key performance metric gauges our expense usage via our net efficiency calculation. This calculation compares the level of expenses to the level of net revenues.revenues and is calculated by dividing the operating expenses by total net revenue, as presented below. A lower result reflects a more efficient use of our expenses to generate revenue. Net efficiency ratio is a non-GAAP measurement used by management to measure operating expenses (before restructuring costs and intangible amortization) to total net revenues. Due to the exclusions of the mentioned items, and in certain instances, other noteworthy items, these are considered non-GAAP measures, as presented in the reconciliation below. We exclude the recurring items from these calculations as they are charges resulting from our strategic initiatives and not our operating activity, and exclude the noteworthy items due to their episodic nature and size. Due to the exclusions of the mentioned items, and in certain instances, other noteworthy items, these are considered non-GAAP measures, as presented in the reconciliation below.
Quarters Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||||||
Operating expenses(1) | $ | (311.6 | ) | $ | (341.3 | ) | $ | (330.1 | ) | ||||||
Intangible asset amortization | 6.2 | 6.4 | 6.4 | ||||||||||||
Provision for severance and facilities exiting activities | 14.8 | 3.9 | 20.3 | ||||||||||||
Operating expenses excluding restructuring costs and intangible asset amortization | $ | (290.6 | ) | $ | (331.0 | ) | $ | (303.4 | ) | ||||||
OneWest Bank legacy matters | – | 27.0 | – | ||||||||||||
Operating expenses exclusive of restructuring costs and intangible assets amortization, and other noteworthy items | (290.6 | ) | (304.0 | ) | (303.4 | ) | |||||||||
Operating expenses as a % of AEA | (2.67 | )% | (2.91 | )% | (2.74 | )% | |||||||||
Operating expenses excluding restructuring costs and intangible amortization | (2.49 | )% | (2.82 | )% | (2.52 | )% | |||||||||
Operating expenses excluding restructuring costs and intangible amortization and other noteworthy items as a % of AEA | (2.49 | )% | (2.59 | )% | (2.52 | )% | |||||||||
Total Net Revenue | $ | 495.7 | $ | 303.1 | $ | 526.6 | |||||||||
CTA Charge | 8.1 | – | – | ||||||||||||
TRS Termination Charge | – | 243.0 | – | ||||||||||||
Canada Portfolio Sale Gain | – | (22.0 | ) | – | |||||||||||
Gain on sale — UK business | – | – | (24.0 | ) | |||||||||||
Asset Impairment | – | – | 11.0 | ||||||||||||
Liquidating Europe CTA | – | – | 3.0 | ||||||||||||
Total Adjusted Net Revenue | $ | 503.8 | $ | 524.1 | $ | 516.6 | |||||||||
Net Efficiency Ratio(2) | 58.6 | % | 109.2 | % | 57.6 | % | |||||||||
Net Efficiency Ratio Adjusted(2) | 57.7 | % | 58.0 | % | 58.7 | % |
Operating Expenses Excluding Certain Costs (dollars in millions) | |||||||||||
Quarters Ended | |||||||||||
Operating Expenses | March 31, 2018 | December 31, 2017 | March 31, 2017 | ||||||||
Operating expenses | $ | 281.3 | $ | 304.0 | $ | 311.6 | |||||
Intangible asset amortization | 6.0 | 6.1 | 6.2 | ||||||||
Restructuring costs | — | 31.9 | 14.8 | ||||||||
Operating expenses excluding restructuring costs, intangible assets amortization, and other noteworthy items (Non-GAAP) | $ | 275.3 | $ | 266.0 | $ | 290.6 | |||||
Operating expenses (excluding restructuring costs and intangible assets amortization) as a % of AEA (excluding noteworthy items) | 2.43 | % | 2.39 | % | 2.49 | % | |||||
Total Net Revenue (Non-GAAP) | $ | 495.2 | $ | 536.6 | $ | 495.7 | |||||
Suspended depreciation on assets HFS | (9.3 | ) | (8.8 | ) | — | ||||||
LIHTC accounting policy change | — | (29.4 | ) | — | |||||||
CTA charge | — | — | 8.1 | ||||||||
Total Net Revenue, excluding noteworthy items (Non-GAAP) | $ | 485.9 | $ | 498.4 | $ | 503.8 | |||||
Net Efficiency Ratio | 55.6 | % | 49.6 | % | 58.6 | % | |||||
Net Efficiency Ratio excluding noteworthy items | 56.7 | % | 53.4 | % | 57.7 | % |
3. |
Other Non-Interest Income (dollars in millions) | |||||||||||
Quarters Ended | |||||||||||
March 31, 2018 | December 31, 2017 | March 31, 2017 | |||||||||
Other non-interest income | $ | 104.7 | $ | 137.2 | $ | 79.1 | |||||
CTA charge | — | — | 8.1 | ||||||||
LIHTC accounting policy change | — | (29.4 | ) | — | |||||||
Total other non-interest income, excluding noteworthy items (Non-GAAP) | $ | 104.7 | $ | 107.8 | $ | 87.2 |
3. 4. Earning Assets and Average Earning Assets (“AEA”) (AEA) provides a basis for management performance calculations such as NFM and operating expenses as a %percentage of AEA. The average is derived using month end balances for the respective period. Because the balances are used in aggregate, as well the average, there are no direct comparative balances on the balance sheet, therefore these are considered non-GAAP measures.
March 31, 2017 | December 31, 2016 | March 31, 2016 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Loans(1) | $ | 29,691.4 | $ | 29,535.9 | $ | 30,948.7 | ||||||||
Operating lease equipment, net(1) | 7,516.2 | 7,486.1 | 7,071.4 | |||||||||||
Interest bearing cash(1) | 5,415.2 | 5,608.5 | 6,584.7 | |||||||||||
Investment securities(1) | 4,476.3 | 4,491.1 | 2,896.8 | |||||||||||
Assets held for sale(1) | 562.6 | 636.0 | 1,487.4 | |||||||||||
Indemnification assets(1) | 313.1 | 341.4 | 381.4 | |||||||||||
Credit balances of factoring clients(1) | (1,547.1 | ) | (1,292.0 | ) | (1,361.0 | ) | ||||||||
Total earning assets | $ | 46,427.7 | $ | 46,807.0 | $ | 48,009.4 | ||||||||
Average Earning Assets (for the respective quarters) | $ | 46,638.9 | $ | 46,964.7 | $ | 48,107.1 |
Earning Assets (dollars in millions) | |||||||||||
Quarters Ended | |||||||||||
Period End Earning Assets | March 31, 2018 | December 31, 2017 | March 31, 2017 | ||||||||
Loans | $ | 29,453.6 | $ | 29,113.9 | $ | 29,691.4 | |||||
Operating lease equipment, net | 6,774.9 | 6,738.9 | 7,516.2 | ||||||||
Assets held for sale | 2,298.8 | 2,263.1 | 562.6 | ||||||||
Credit balances of factoring clients | (1,549.0 | ) | (1,468.6 | ) | (1,547.1 | ) | |||||
Interest-bearing cash | 3,895.4 | 1,440.1 | 5,415.2 | ||||||||
Investment securities | 5,910.5 | 6,469.9 | 4,476.3 | ||||||||
Securities purchased under agreement to resell | 250.0 | 150.0 | — | ||||||||
Indemnification assets | 120.5 | 142.4 | 313.1 | ||||||||
Total earning assets (Non-GAAP) | $ | 47,154.7 | $ | 44,849.7 | $ | 46,427.7 | |||||
Average Earning Assets (for the respective periods) (Non-GAAP) | $ | 45,265.1 | $ | 44,562.1 | $ | 46,638.9 | |||||
AEA, excluding noteworthy items (Non-GAAP) | $ | 45,265.1 | $ | 44,562.1 | $ | 46,638.9 |
5. | Tangible Book Value, ROTCE and Tangible Book Value per Share |
Quarters Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||||||
Total common stockholders’ equity(1) | $ | 10,165.2 | $ | 10,002.7 | $ | 11,091.6 | |||||||||
Less: Goodwill(1) | (686.1 | ) | (685.4 | ) | (1,060.0 | ) | |||||||||
Intangible assets(1) | (134.3 | ) | (140.7 | ) | (160.9 | ) | |||||||||
Tangible book value | 9,344.8 | 9,176.6 | 9,870.7 | ||||||||||||
Less: disallowed deferred tax asset | (140.6 | ) | (213.7 | ) | (878.2 | ) | |||||||||
Adjusted tangible common equity | $ | 9,204.2 | $ | 8,962.9 | $ | 8,992.5 | |||||||||
Average adjusted tangible common equity | $ | 9,118.8 | $ | 9,220.8 | $ | 8,932.3 | |||||||||
Net Income (loss)(2) | $ | 179.9 | $ | (1,142.5 | ) | $ | 146.0 | ||||||||
Intangible asset amortization, after tax | 4.1 | 5.3 | 3.0 | ||||||||||||
Non-GAAP loss from continuing operations, ROTCE calculation | $ | 184.0 | $ | (1,137.2 | ) | $ | 149.0 | ||||||||
Return on average tangible common equity | 8.08 | % | (49.32 | )% | 6.68 | % | |||||||||
Non-GAAP income (reconciled below) | $ | 163.2 | $ | 209.7 | $ | 142.0 | |||||||||
Adjustments: intangible assets amortization, net of tax | 4.1 | 5.3 | 3.0 | ||||||||||||
Non-GAAP income — for ROTCE calculation | $ | 167.3 | $ | 215.0 | $ | 145.0 | |||||||||
Adjusted return on tangible common equity | 7.34 | % | 9.33 | % | 6.50 | % | |||||||||
Non-GAAP income from continuing operations (reconciled below) | $ | 109.5 | $ | 125.4 | $ | 57.0 | |||||||||
Intangible asset amortization, after tax | 4.1 | 5.3 | 3.0 | ||||||||||||
Non-GAAP income from continuing operations — for ROTCE calculation | $ | 113.6 | $ | 130.7 | $ | 60.0 | |||||||||
Average adjusted tangible common equity | $ | 9,118.8 | $ | 9,220.8 | $ | 8,932.3 | |||||||||
Pro forma estimated capital adjustment related to Commercial Air sale | (2,975.0 | ) | (2,975.0 | ) | (2,975.0 | ) | |||||||||
Average adjusted tangible common equity pro forma for estimated capital adjustment | $ | 6,143.8 | $ | 6,245.8 | $ | 5,957.3 | |||||||||
Return on average tangible common equity, after noteworthy items and pro forma for estimated capital adjustment | 7.40 | % | 8.37 | % | 4.03 | % |
Tangible Book Value (dollars in millions) | |||||||||||
Quarters Ended | |||||||||||
Tangible Book Value | March 31, 2018 | December 31, 2017 | March 31, 2017 | ||||||||
Total common shareholders' equity | $ | 6,801.8 | $ | 6,995.0 | $ | 10,165.2 | |||||
Less: Goodwill | (369.9 | ) | (369.9 | ) | (686.1 | ) | |||||
Intangible assets | (107.0 | ) | (113.0 | ) | (134.3 | ) | |||||
Tangible book value (Non-GAAP) | 6,324.9 | 6,512.1 | 9,344.8 | ||||||||
Less: Disallowed deferred tax asset | (98.9 | ) | (104.8 | ) | (140.6 | ) | |||||
Tangible common equity (Non-GAAP) | $ | 6,226.0 | $ | 6,407.3 | $ | 9,204.2 | |||||
Average tangible common equity (Non-GAAP) | $ | 6,332.1 | $ | 6,327.5 | $ | 9,118.8 | |||||
Estimated capital adjustment related to Commercial Air sale | — | — | (2,975.0 | ) | |||||||
Average tangible common equity, excluding noteworthy items (Non-GAAP) | $ | 6,332.1 | $ | 6,327.5 | $ | 6,143.8 | |||||
Net income (loss) applicable to common shareholders | $ | 97.0 | $ | (97.8 | ) | $ | 179.9 | ||||
Goodwill impairment | — | 222.1 | — | ||||||||
Intangible asset amortization, after tax | 4.4 | 3.7 | 4.1 | ||||||||
Non-GAAP income - for ROTCE calculation | $ | 101.4 | $ | 128.0 | $ | 184.0 | |||||
Return on average tangible common equity | 6.41 | % | 8.09 | % | 8.07 | % | |||||
Non-GAAP income applicable to common shareholders (from the following non-GAAP noteworthy tables) | $ | 90.2 | $ | 125.1 | $ | 163.1 | |||||
Intangible asset amortization, after tax | 4.4 | 3.7 | 4.1 | ||||||||
Non-GAAP income - for ROTCE calculation | $ | 94.6 | $ | 128.8 | $ | 167.2 | |||||
Return on average tangible common equity, excluding noteworthy items | 5.98 | % | 8.14 | % | 10.89 | % | |||||
Income (loss) from continuing operations applicable to common shareholders | $ | 103.7 | $ | (92.6 | ) | $ | 78.2 | ||||
Goodwill impairment | — | 222.1 | — | ||||||||
Intangible asset amortization, after tax | 4.4 | 3.7 | 4.1 | ||||||||
Non-GAAP income from continuing operations - for ROTCE calculation | $ | 108.1 | $ | 133.2 | $ | 82.3 | |||||
Non-GAAP income from continuing operations (from next page) | $ | 96.9 | $ | 130.3 | $ | 109.4 | |||||
Intangible asset amortization, after tax | 4.4 | 3.7 | 4.1 | ||||||||
Non-GAAP income from continuing operations - for ROTCE calculation | $ | 101.3 | $ | 134.0 | $ | 113.5 | |||||
Average tangible common equity(7) | $ | 6,332.1 | $ | 6,327.5 | $ | 9,118.8 | |||||
Estimated capital adjustment related to Commercial Air sale | — | — | (2,975.0 | ) | |||||||
Average tangible common equity(7) pro forma for estimated capital adjustment | $ | 6,332.1 | $ | 6,327.5 | $ | 6,143.8 | |||||
Return on average tangible common equity, proforma for estimated capital adjustment | 6.83 | % | 8.42 | % | 5.36 | % | |||||
Return on average tangible common equity, after noteworthy items(8) and proforma for estimated capital adjustment | 6.40 | % | 8.47 | % | 7.40 | % |
6. | Net income excluding noteworthy items and income from continuing operations excluding noteworthy items |
Description | Income Statement Line Item | Pre-tax Balance | Income Tax(2) | After-tax Balance | Per Share | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Quarter Ended March 31, 2017 | ||||||||||||||||||||||
Net income | $ | 180 | $ | 0.88 | ||||||||||||||||||
Continuing Operations | CTA Charge | Other income | $ | 8 | $ | (1 | ) | 7 | 0.03 | |||||||||||||
Restructuring Expenses | Operating expenses | 15 | (5 | ) | 10 | 0.05 | ||||||||||||||||
Entity Restructuring | Provision for income taxes | – | 14 | 14 | 0.07 | |||||||||||||||||
Discontinued Operations | Suspended Depreciation | (113 | ) | 44 | (69 | ) | (0.34 | ) | ||||||||||||||
Secured Debt Paydown | 34 | – | 34 | 0.17 | ||||||||||||||||||
TC CIT JV Gain | (14 | ) | 1 | (13 | ) | (0.06 | ) | |||||||||||||||
Non-GAAP income, excluding noteworthy items(1) | $ | 163 | $ | 0.80 | ||||||||||||||||||
Income from continuing operations | $ | 78 | $ | 0.38 | ||||||||||||||||||
Continuing Operations | CTA Charge | Other income | $ | 8 | $ | (1 | ) | 7 | 0.03 | |||||||||||||
Restructuring Expenses | Operating expenses | 15 | (5 | ) | 10 | 0.05 | ||||||||||||||||
Entity Restructuring | Provision for income taxes | – | 14 | 14 | 0.07 | |||||||||||||||||
Non-GAAP income from continuing operations, excluding noteworthy items(1) | $ | 109 | $ | 0.54 | ||||||||||||||||||
Quarter Ended December 31, 2016 | ||||||||||||||||||||||
Net loss | $ | (1,143 | ) | $ | (5.65 | ) | ||||||||||||||||
Continuing Operations | TRS Termination Charge | Other income | $ | 243 | $ | (97 | ) | 146 | 0.72 | |||||||||||||
Consumer Goodwill Impairment | Goodwill impairment | 319 | – | 319 | 1.58 | |||||||||||||||||
Commercial Services Goodwill Impairment | Goodwill impairment | 35 | (7 | ) | 28 | 0.14 | ||||||||||||||||
Canadian Assertion Change | Provision for income taxes | – | 54 | 54 | 0.27 | |||||||||||||||||
Canada Portfolio Sale Gain | Other income | (22 | ) | 6 | (16 | ) | (0.08 | ) | ||||||||||||||
OneWest Bank Legacy Matters | Operating expenses | 27 | (10 | ) | 17 | 0.08 | ||||||||||||||||
Restructuring | Operating expenses | 4 | (1 | ) | 3 | 0.01 | ||||||||||||||||
Discontinued Operations | Commercial Air Tax Provision | – | 847 | 847 | 4.19 | |||||||||||||||||
Commercial Air Suspended Depreciation | (106 | ) | 40 | (66 | ) | (0.33 | ) | |||||||||||||||
Financial Freedom Reserve | 27 | (11 | ) | 16 | 0.08 | |||||||||||||||||
Business Air Impairment | 7 | (3 | ) | 4 | 0.02 | |||||||||||||||||
Non-GAAP income, excluding noteworthy items(1) | $ | 210 | $ | 1.04 | ||||||||||||||||||
Loss from continuing operations | $ | (426 | ) | $ | (2.10 | ) | ||||||||||||||||
Continuing Operations | TRS Termination Charge | Other income | $ | 243 | $ | (97 | ) | 146 | 0.72 | |||||||||||||
Consumer Goodwill Impairment | Goodwill impairment | 319 | – | 319 | 1.58 | |||||||||||||||||
Commercial Services Goodwill Impairment | Goodwill impairment | 35 | (7 | ) | 28 | 0.14 | ||||||||||||||||
Canadian Assertion Change | Provision for income taxes | – | 54 | 54 | 0.27 | |||||||||||||||||
Canada Portfolio Sale Gain | Other income | (22 | ) | 6 | (16 | ) | (0.08 | ) | ||||||||||||||
OneWest Bank Legacy Matters | Operating expenses | 27 | (10 | ) | 17 | 0.08 | ||||||||||||||||
Restructuring | Operating expenses | 4 | (1 | ) | 3 | 0.01 | ||||||||||||||||
Non-GAAP income from continuing operations, excluding noteworthy items(1) | $ | 125 | $ | 0.62 |
Net Income and Income from Continuing Operations, Excluding Noteworthy Items (dollars in millions, except per share data) | ||||||||||||||||||
Description | Line Item | Pre-tax Balance | Income Tax(2) | After-tax Balance | Per Share | |||||||||||||
Quarter Ended March 31, 2018 | ||||||||||||||||||
Net income applicable to common shareholders | $ | 97.0 | $ | 0.74 | ||||||||||||||
Continuing Operations | NACCO suspended depreciation | Depreciation on operating lease equipment | $ | (9.3 | ) | $ | 2.5 | (6.8 | ) | (0.05 | ) | |||||||
Non-GAAP income applicable to common shareholders, excluding noteworthy items(1) | $ | 90.2 | $ | 0.69 | ||||||||||||||
Income from continuing operations applicable to common shareholders | $ | 103.7 | $ | 0.79 | ||||||||||||||
Continuing Operations | NACCO suspended depreciation | Depreciation on operating lease equipment | $ | (9.3 | ) | $ | 2.5 | (6.8 | ) | (0.05 | ) | |||||||
Non-GAAP income from continuing operations applicable to common shareholders, excluding noteworthy items(1) | $ | 96.9 | $ | 0.74 | ||||||||||||||
Quarter Ended December 31, 2017 | ||||||||||||||||||
Net income applicable to common shareholders | $ | (97.8 | ) | $ | (0.74 | ) | ||||||||||||
Continuing Operations | LIHTC accounting policy change | Other non-interest income | $ | (29.4 | ) | $ | — | (29.4 | ) | (0.22 | ) | |||||||
LIHTC accounting policy change | Benefit / provision for income taxes | — | 38.2 | 38.2 | 0.29 | |||||||||||||
NACCO suspended depreciation | Depreciation on operating lease equipment | (8.8 | ) | 2.7 | (6.1 | ) | (0.05 | ) | ||||||||||
NACCO DTA/DTL rate change | Benefit / provision for income taxes | — | (11.0 | ) | (11.0 | ) | (0.08 | ) | ||||||||||
NACCO investment | Benefit / provision for income taxes | — | 12.0 | 12.0 | 0.09 | |||||||||||||
Goodwill impairment | Goodwill impairment | 255.6 | (33.5 | ) | 222.1 | 1.69 | ||||||||||||
Strategic tax item - restructuring of an international legal entity | Benefit / provision for income taxes | — | (11.3 | ) | (11.3 | ) | (0.09 | ) | ||||||||||
Tax reform | Benefit / provision for income taxes | — | (11.6 | ) | (11.6 | ) | (0.09 | ) | ||||||||||
Restructuring expenses | Operating expenses | 31.9 | (11.9 | ) | 20.0 | 0.15 | ||||||||||||
Non-GAAP income from continuing operations applicable to common shareholders, excluding noteworthy items(1) | $ | 125.1 | $ | 0.95 | ||||||||||||||
Income from continuing operations applicable to common shareholders | $ | (92.6 | ) | $ | (0.70 | ) | ||||||||||||
Continuing Operations | LIHTC accounting policy change | Other non-interest income | $ | (29.4 | ) | $ | — | (29.4 | ) | (0.22 | ) | |||||||
LIHTC accounting policy change | Benefit / provision for income taxes | — | 38.2 | 38.2 | 0.29 | |||||||||||||
NACCO suspended depreciation | Depreciation on operating lease equipment | (8.8 | ) | 2.7 | (6.1 | ) | (0.05 | ) | ||||||||||
NACCO DTA/DTL rate change | Benefit / provision for income taxes | — | (11.0 | ) | (11.0 | ) | (0.08 | ) | ||||||||||
NACCO investment | Benefit / provision for income taxes | — | 12.0 | 12.0 | 0.09 | |||||||||||||
Goodwill impairment | Goodwill impairment | 255.6 | (33.5 | ) | 222.1 | 1.69 | ||||||||||||
Strategic tax item - restructuring of an international legal entity | Benefit / provision for income taxes | — | (11.3 | ) | (11.3 | ) | (0.09 | ) | ||||||||||
Tax reform | Benefit / provision for income taxes | — | (11.6 | ) | (11.6 | ) | (0.09 | ) | ||||||||||
Restructuring expenses | Operating expenses | 31.9 | (11.9 | ) | 20.0 | 0.15 | ||||||||||||
Non-GAAP income from continuing operations applicable to common shareholders, excluding noteworthy items(1) | $ | 130.3 | $ | 0.99 | ||||||||||||||
Quarter Ended March 31, 2017 | ||||||||||||||||||
Net income applicable to common shareholders | $ | 179.9 | $ | 0.88 | ||||||||||||||
Continuing Operations | CTA Charge | Other non-interest income | $ | 8.1 | $ | (1.3 | ) | 6.8 | 0.03 | |||||||||
Restructuring expenses | Operating expenses | 14.8 | (4.4 | ) | 10.4 | 0.05 | ||||||||||||
Entity Restructuring | Benefit / provision for income taxes | — | 14.0 | 14.0 | 0.07 | |||||||||||||
Discontinued Operations | Suspended depreciation | (113.0 | ) | 44.0 | (69.0 | ) | (0.34 | ) | ||||||||||
Secured Debt Paydown | 39.0 | (5.0 | ) | 34.0 | 0.17 | |||||||||||||
Gain on Sale - TC CIT joint venture | (14.0 | ) | 1.0 | (13.0 | ) | (0.06 | ) | |||||||||||
Non-GAAP income applicable to common shareholders, excluding noteworthy items(1) | $ | 163.1 | $ | 0.80 | ||||||||||||||
Income from continuing operations applicable to common shareholders | $ | 78.2 | $ | 0.38 | ||||||||||||||
Continuing Operations | CTA Charge | Other non-interest income | $ | 8.1 | $ | (1.3 | ) | 6.8 | 0.03 | |||||||||
Restructuring expenses | Operating expenses | 14.8 | (4.4 | ) | 10.4 | 0.05 | ||||||||||||
Entity Restructuring | Benefit / provision for income taxes | — | 14.0 | 14.0 | 0.07 | |||||||||||||
Non-GAAP income from continuing operations applicable to common shareholders, excluding noteworthy items(1) | $ | 109.4 | $ | 0.54 |
Description | Income Statement Line Item | Pre-tax Balance | Income Tax(2) | After-tax Balance | Per Share | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Quarter Ended March 31, 2016 | |||||||||||||||||||||||
Net income | $ | 146 | $ | 0.72 | |||||||||||||||||||
Continuing Operations | Gain on Sale — UK business | Other income | $ | (24 | ) | $ | 9 | (15 | ) | (0.07 | ) | ||||||||||||
Restructuring Expenses | Operating expenses | 20 | (7 | ) | 13 | 0.06 | |||||||||||||||||
Discrete Tax Benefit | Provision for income taxes | – | (13 | ) | (13 | ) | (0.06 | ) | |||||||||||||||
Asset Impairment | Other income | 11 | (3 | ) | 8 | 0.04 | |||||||||||||||||
Liquidating Europe CTA | Other income | 3 | – | 3 | 0.01 | ||||||||||||||||||
Non-GAAP income, excluding noteworthy items(1) | $ | 142 | $ | 0.70 | |||||||||||||||||||
Income from continuing operations | $ | 61 | $ | 0.30 | |||||||||||||||||||
Continuing Operations | Gain on Sale — UK | Other income | $ | (24 | ) | $ | 9 | (15 | ) | (0.07 | ) | ||||||||||||
Restructuring Expenses | Operating expenses | 20 | (7 | ) | 13 | 0.06 | |||||||||||||||||
Discrete Tax Benefit | Provision for income taxes | – | (13 | ) | (13 | ) | (0.06 | ) | |||||||||||||||
Asset Impairment | Other income | 11 | (3 | ) | 8 | 0.04 | |||||||||||||||||
Liquidating Europe CTA | Other income | 3 | – | 3 | 0.01 | ||||||||||||||||||
Non-GAAP income from continuing operations, excluding noteworthy items(1) | $ | 57 | $ | 0.28 |
(1) | Items may not sum due to rounding. |
(2) | Income tax rates vary depending on the specific item and the entity location in which it is recorded. |
March 31, 2017 | December 31, 2016 | March 31, 2016 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total assets(1) | $ | 63,094.4 | $ | 64,170.2 | $ | 67,088.6 | ||||||||
Assets of discontinued operation(1) | (12,718.2 | ) | (13,220.7 | ) | (12,951.7 | ) | ||||||||
Continuing operations total assets | $ | 50,376.2 | $ | 50,949.5 | $ | 54,136.9 |
7. Effective Tax Rate Reconciliation |
Quarters Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||||||
(Provision) benefit for income taxes(1) | $ | (56.2 | ) | $ | 6.6 | $ | (44.4 | ) | |||||||
Discrete items | 11.3 | 58.5 | (11.0 | ) | |||||||||||
(Provision) benefit for income taxes, before discrete items | $ | (44.9 | ) | $ | 65.1 | $ | (55.4 | ) | |||||||
Income (loss) from continuing operations before provision for income taxes(1) | $ | 134.4 | $ | (432.4 | ) | $ | 105.4 | ||||||||
Effective tax rate | 41.8 | % | 1.5 | % | 42.1 | % | |||||||||
Effective tax rate, before discrete items | 33.4 | % | 15.1 | % | 52.6 | % |
Quarters Ended | |||||||||||
Effective Tax Rate Reconciliation - Noteworthy Items | March 31, 2018 | December 31, 2017 | March 31, 2017 | ||||||||
Provision for income taxes - GAAP | $ | 41.3 | $ | 27.7 | $ | 56.2 | |||||
Income taxes on noteworthy items | 2.5 | (26.4 | ) | 8.3 | |||||||
Provision for income taxes, before noteworthy items - Non-GAAP | 38.8 | 54.1 | 47.9 | ||||||||
Income tax - remaining discrete items | 1.7 | (22.4 | ) | (2.3 | ) | ||||||
Provision for income taxes, before noteworthy and discrete tax items - Non-GAAP | $ | 37.1 | $ | 76.5 | $ | 50.2 | |||||
Income (loss) from continuing operations before provision for income taxes - GAAP | $ | 145.0 | $ | (55.1 | ) | $ | 134.4 | ||||
Noteworthy items before tax | (9.3 | ) | 249.3 | 22.9 | |||||||
Adjusted income from continuing operations before provision for income taxes - Non-GAAP | $ | 135.7 | $ | 194.2 | $ | 157.3 | |||||
Effective tax rate - GAAP | 28.5 | % | (50.3 | )% | 41.8 | % | |||||
Effective tax rate, before noteworthy items - Non-GAAP | 28.6 | % | 27.9 | % | 30.5 | % | |||||
Effective tax rate, before noteworthy and tax discrete items - Non-GAAP | 27.3 | % | 39.4 | % | 31.9 | % |
8. | Regulatory |
our liquidity risk and capital management, including our capital plan, leverage, capital ratios, and credit ratings, our liquidity plan, and our plans and the potential transactions designed to enhance our liquidity and capital, to repay secured and unsecured debt, to issue qualifying capital instruments, including Tier 1 qualifying preferred stock, and for a return of capital, our plans to change our funding mix, to access new sources of funding, and to broaden our use of deposit taking capabilities, including increasing our level of commercial deposits and expanding our treasury management services, our pending or potential acquisition and disposition plans, and the integration and restructuring risks inherent in such acquisitions, including our proposed sale of our Financial Freedom reverse mortgage servicing business and reverse mortgage loan portfolio, our Business Air loan portfolio, and NACCO, our European railcar leasing business, our credit risk management and credit quality, our asset/liability risk management, our funding, borrowing costs and net finance revenue, our operational risks, including risk of operational errors, failure of operational controls, success of systems enhancements and expansion of risk management and control functions, our mix of portfolio asset classes, including changes resulting from growth initiatives, new business initiatives, new products, acquisitions and divestitures, new business and customer retention, our legal risks, including the enforceability of our agreements, the impact of legal proceedings, and the impact of changes in laws and regulations, our growth rates, and 80 Item 2. Management’s Discussion and Analysis and Item 3. Quantitative and Qualitative Disclosures about Market Risk our commitments to extend credit or purchase equipment. |
Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs | ||||||||
January 1 - 31, 2018 | 87,600 | $ | 49.62 | 87,600 | |||||||
February 1 - 28, 2018 | 1,653,519 | $ | 52.39 | 1,653,519 | |||||||
March 1 - 31, 2018 | 1,924,747 | $ | 53.98 | 1,924,747 | |||||||
Total Purchases | 3,665,866 |
(a) | Exhibits |
2.1 | Agreement and Plan of Merger, by and among CIT Group Inc., IMB HoldCo LLC, Carbon Merger Sub LLC and JCF III HoldCo I L.P., dated as of July 21, 2014 (incorporated by reference to Exhibit 2.1 to Form 8-K filed July 25, 2014). | |||
2.2 | Amendment No. 1, dated as of July 21, 2015, to the Agreement and Plan of Merger, by and among CIT Group Inc., IMB HoldCo I L.P., Carbon Merger Sub LLC and JCF III HoldCo I L.P., dated as of July 21, 2014 (incorporated by reference to Exhibit 2.1 to Form 8-K filed July 27, 2015). | |||
3.1 | Fourth Restated Certificate of Incorporation of the Company, as filed with the Office of the Secretary of State of the State of Delaware on May 17, 2016 (incorporated by reference to Exhibit 3.1 to Form 8-K filed May 17, 2016). | |||
3.2 | Amended and Restated By-laws of the Company, as amended through May 15, 2016 (incorporated by reference to Exhibit 3.2 to Form 8-K filed May 17, 2016). | |||
3.3 | Certificate of Designation of Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A of CIT Group Inc., dated June 6, 2017 (incorporated by reference to Exhibit 3.1 to Form 8-K filed June 7, 2017). | |||
4.1 | Indenture, dated as of January 20, 2006, between CIT Group Inc. and The Bank of New York Mellon (as successor to JPMorgan Chase Bank N.A.) for the issuance of senior debt securities (incorporated by reference to Exhibit 4.3 to Form S-3 filed January 20, 2006). | |||
4.2 | ||||
10.5* | |||||
Form of CIT Group Inc. Long-term Incentive Plan Restricted Stock Unit Director Award Agreement (Initial Grant) (incorporated by reference to Exhibit 10.39 to Form 10-Q filed August 9, 2010). | |||||
Form of CIT Group Inc. Long-term Incentive Plan Restricted Stock Unit Director Award Agreement (Annual Grant) (incorporated by reference to Exhibit 10.40 to Form 10-Q filed August 9, 2010). | |||||
Amended and Restated Confirmation, dated June 28, 2012, between CIT TRS Funding B.V. and Goldman Sachs International, and Credit Support Annex and ISDA Master Agreement and Schedule, each dated October 26, 2011, between CIT TRS Funding B.V. and Goldman Sachs International, evidencing a $625 billion securities based financing facility (incorporated by reference to Exhibit 10.32 to Form 10-Q filed August 9, 2012). | |||||
CIT Employee Severance Plan (Effective as of November 6, 2013) (incorporated by reference to Exhibit 10.37 in Form 10-Q filed November 6, 2013). |
10.9 | Stockholders Agreement, by and among CIT Group Inc. and the parties listed on the signature pages thereto, dated as of July 21, 2014 (incorporated by reference to Exhibit 10.1 to Form 8-K filed July 25, 2014). | ||||
Form of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (with Performance Based Vesting) (2014) (incorporated by reference to Exhibit 10.32 to Form 10-K filed February 20, 2015). | |||||
Form of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (2014) | |||||
Form of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (2015) (with ROTCE and Credit Provision Performance Measures) (incorporated by reference to Exhibit | |||||
Form of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (2015) (with Average Earnings per Share and Average Pre-Tax Return on Assets Performance Measures) (incorporated by reference to Exhibit | |||||
Offer Letter, dated October 27, 2015, between CIT Group Inc. and Ellen R. Alemany, including Attached Exhibits. (incorporated by reference to Exhibit 10.39 to Form 10-Q filed November 13, 2015). | |||||
Form of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (2016) (with ROTCE and Credit Provision Performance Measures) | |||||
Form of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (2016) (with Performance Based Vesting) (incorporated by reference to Exhibit | |||||
Form of CIT Group Inc. Omnibus Incentive Plan Performance Share Unit Award Agreement (2016) (with ROTCE and Credit Provision Performance Measures) (incorporated by reference to Exhibit | |||||
Form of CIT Group Inc. Omnibus Incentive Plan Restricted Stock Unit Award Agreement (with Performance Based Vesting) (2016) (incorporated by reference to Exhibit | |||||
CIT Employee Severance Plan (As Amended and Restated Effective January 1, 2017) (incorporated by reference to Exhibit 10.40 to Form 10-Q filed November 9, 2016). | |||||
Form of CIT Group Inc. Omnibus Incentive Plan Restricted Stock Unit Director Award Agreement (Three Year Vesting) (incorporated by reference to Exhibit | |||||
Form of CIT Group Inc. Omnibus Incentive Plan Performance Share Unit Award Agreement (2017) (with ROTCE Performance Measure and TSR Modifier) | |||||
Form of CIT Group Inc. Omnibus Incentive Plan Restricted Stock Unit Award Agreement (with Performance Based Vesting) (2017) (incorporated by reference to Exhibit 10.40 to Form 10-Q filed May 8, 2017). | |||||
10.23 | |||||
10.24 | |||||
12.1 | |||||
31.1 | |||||
31.2 |
32.1*** | |||||
32.2*** |
101.INS | XBRL Instance Document (Includes the following financial information included in the Company’s | |||
101.SCH | XBRL Taxonomy Extension Schema Document. | |||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | |||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. |
* | Indicates a management contract or compensatory plan or arrangement. |
** | Portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission as part of an application for granting confidential treatment pursuant to the Securities Exchange Act of 1934, as amended. |
*** | This information is furnished and not filed for purposes of Section 18 of the Securities Exchange Act of 1934 and is not incorporated by reference into any filing under the Securities Act of 1933. |
May | 4, 2018 | CIT GROUP INC. | ||||
/s/ | ||||||
John Fawcett | ||||||
Executive Vice President and Chief Financial Officer | ||||||
/s/ Edward K. Sperling | ||||||
Edward K. Sperling | ||||||
Executive Vice President and Controller |