Washington, D.C. 20549
|X| | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2014 | or | | | | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Delaware (State or other jurisdiction of incorporation or organization) | 65-1051192 (IRS Employer Identification No.) | ||||||
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 including area code: | |||||||
Securities registered pursuant to Section 12(b) of the Act: | |||||||
Title of each class Common Stock, par value $0.01 per share | Name of each exchange on which registered New York Stock Exchange | ||||||
Securities registered pursuant to Section 12(g) of the Act: None |
Yes |X| No | |
Yes | | No |X|
Large accelerated filer |X| Accelerated filer | |
Non-accelerated filer | | Smaller reporting company | |
Yes | | No |X|
Yes |X| No | |
CONTENTS
Part One | ||||||||
Item 1. | Business Overview | 2 | ||||||
Where You Can Find More Information | 16 | |||||||
Item 1A. | Risk Factors | 19 | ||||||
Item 1B. | Unresolved Staff Comments | 27 | ||||||
Item 2. | Properties | 27 | ||||||
Item 3. | Legal Proceedings | 27 | ||||||
Item 4. | Mine Safety Disclosures | 27 | ||||||
Part Two | ||||||||
Item 5. | Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities | 28 | ||||||
Item 6. | Selected Financial Data | 30 | ||||||
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 34 | ||||||
Item 7A. | Quantitative and Qualitative Disclosure about Market Risk | 34 | ||||||
Item 8. | Financial Statements and Supplementary Data | 86 | ||||||
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 149 | ||||||
Item 9A. | Controls and Procedures | 149 | ||||||
Item 9B. | Other Information | 149 | ||||||
Part Three | ||||||||
Item 10. | Directors, Executive Officers and Corporate Governance | 150 | ||||||
Item 11. | Executive Compensation | 150 | ||||||
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 150 | ||||||
Item 13. | Certain Relationships and Related Transactions, and Director Independence | 150 | ||||||
Item 14. | Principal Accountant Fees and Services | 150 | ||||||
Part Four | ||||||||
Item 15. | Exhibits and Financial Statement Schedules | 151 | ||||||
Signatures | 156 |
Item 1: Business Overview
Products and Services | ||||||
• Account receivables collection | • Enterprise value and cash flow loans | |||||
• Acquisition and expansion financing | • Factoring services | |||||
• Asset management and servicing | • Financial risk management | |||||
• Asset-based loans | • Import and export financing | |||||
• Credit protection | • Insurance services | |||||
• Debt restructuring | • Equipment leases | |||||
• Debt underwriting and syndication | • Letters of credit / trade acceptances | |||||
• Debtor-in-possession / turnaround financing | • Mergers and acquisition advisory services (“M&A”) | |||||
• Deposits | • Secured lines of credit |
BUSINESS SEGMENTS
SEGMENT | DIVISIONS | MARKETS AND SERVICES | ||||
---|---|---|---|---|---|---|
Transportation & International Finance | • Aerospace • Rail • Maritime Finance • International Finance | Large ticket equipment leasing and secured financing to select transportation industries. Equipment finance and secured lending in select international geographies. | ||||
North American Commercial Finance | • Commercial Services • Corporate Finance • Equipment Finance • Real Estate Finance | Factoring, receivables management products and secured financing to retail supply chain companies. Lending, leasing and other financial and advisory services to small and middle-market companies across select industries. | ||||
Non-Strategic Portfolios | Consists of portfolios that we do not consider strategic. | |||||
Corporate and Other | Consists of certain items not allocated to operating segments. |
rents on leases, fees and other revenue from lending activities and capital markets transactions, and commissions earned on factoring activities.
CIT BANK
DISCONTINUED OPERATION
EMPLOYEES
COMPETITION
REGULATION
BHC Act. As an FHC, CIT is subject to certain limitations on our activities, transactions with affiliates, and payment of dividends, and certain standards for capital and liquidity, safety and soundness, and incentive compensation, among other matters. Under the system of “functional regulation” established under the BHC Act, the FRB supervises CIT, including all of its non-bank subsidiaries, as an “umbrella regulator” of the consolidated organization. CIT Bank is chartered as a state bank by the UDFI and is not a member bank of the Federal Reserve System. CIT’s principal regulator is the FRB and CIT Bank’s principal regulators are the FDIC and the UDFI. Both CIT and CIT Bank are regulated by the Consumer Financial Protection Bureau (“CFPB”), which regulates consumer financial products. Upon completion of the merger of CIT Bank with and into OneWest Bank, the resulting bank under the CIT Bank NA name, will be a national bank and its principal regulator will be the OCC.
capital measures be made to CET1 and not to the other components of capital; and (iv) expands the scope of the deductions from and adjustments to capital as compared to existing regulations. For most banking organizations, the most common form of Additional Tier 1 capital is non-cumulative perpetual preferred stock and the most common form of Tier 2 capital is subordinated notes, which will be subject to the Basel III Final Rule specific requirements. The Company does not currently have either of these forms of capital outstanding.
Minimum Capital Requirements — January 1, 2019 | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Tier 1 Common Equity | Tier 1 Capital | Total Capital | |||||||||||||
Stated minimum ratios | 4.5 | % | 6.0 | % | 8.0 | % | |||||||||
Capital conservation buffer | 2.5 | % | 2.5 | % | 2.5 | % | |||||||||
Effective minimum ratios | 7.0 | % | 8.5 | % | 10.5 | % |
As of December 31, 2014 | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Basel I | Basel III Final Rule(1) | ||||||||||||||||||
Actual | Requirement | Actual | Requirement | ||||||||||||||||
CIT | |||||||||||||||||||
Capital | |||||||||||||||||||
CET1 | N/A(2 | ) | $ | 8,242.6 | |||||||||||||||
Tier 1 | $ | 8,067.3 | 8,242.6 | ||||||||||||||||
Total | 8,412.4 | 8,624.4 | |||||||||||||||||
Risk-weighted assets | 55,480.9 | 57,079.4 | |||||||||||||||||
Adjusted quarterly average assets | 46,327.3 | 46,585.9 | |||||||||||||||||
Capital ratios | |||||||||||||||||||
CET1 | N/A(2 | ) | N/A(2 | ) | 14.4 | % | 7.0%(4 | ) | |||||||||||
Tier 1 | 14.5 | % | 6.0%(3 | ) | 14.4 | % | 8.5%(4 | ) | |||||||||||
Total | 15.2 | % | 10.0%(3 | ) | 15.1 | % | 10.5%(4 | ) | |||||||||||
Leverage | 17.4 | % | 4.0 | % | 17.7 | % | 4.0 | % | |||||||||||
CIT Bank | |||||||||||||||||||
Capital | |||||||||||||||||||
CET1 | N/A(2 | ) | $ | 2,536.4 | |||||||||||||||
Tier 1 | $ | 2,536.3 | 2,536.4 | ||||||||||||||||
Total | 2,781.5 | 2,783.4 | |||||||||||||||||
Risk-weighted assets | 19,552.3 | 19,699.6 | |||||||||||||||||
Adjusted quarterly average assets | 20,860.9 | 20,860.9 | |||||||||||||||||
Capital ratios | |||||||||||||||||||
CET1 | N/A(2 | ) | N/A(2 | ) | 12.9 | % | 7.0%(4 | ) | |||||||||||
Tier 1 | 13.0 | % | 6.0%(3 | ) | 12.9 | % | 8.5%(4 | ) | |||||||||||
Total | 14.2 | % | 10.0%(3 | ) | 14.1 | % | 10.5%(4 | ) | |||||||||||
Leverage | 12.2 | % | 5.0%(3 | ) | 12.2 | % | 4.0 | % |
(1) | Basel III Final Rule calculated under the Standardized Approach on a fully phased-in basis that will be required effective January 1, 2019. These ratios are preliminary estimates based upon our present interpretation of the Basel III Final Rule. |
(2) | Not applicable as the CET1 ratio was introduced with the Basel III Final Rule. |
(3) | Basel I minimum requirements for “well capitalized” institution. |
(4) | Required ratios under the Basel III Final Rule include the post-transition minimum capital conversation buffer effective January 1, 2019. |
conducted by the FRB. For CCAR, CIT would submit a capital plan along with the annual company-run stress tests to the FRB. The FRB would conduct a separate supervisory stress test using data submitted by CIT in a format specified by the FRB. Both the FRB and CIT must publish the results of the annual supervisory stress tests and company-run stress tests. From 2016 onward, annual capital plans and company-run stress tests will be submitted by April 5 with publication of results by June 30.
primary federal regulator. Although prompt corrective action regulations apply only to depository institutions and not to BHCs, the holding company must guarantee any such capital restoration plan in certain circumstances. The liability of the parent holding company under any such guarantee is limited to the lesser of five percent of the bank’s assets at the time it became “undercapitalized” or the amount needed to comply. The parent holding company might also be liable for civil money damages for failure to fulfill that guarantee. In the event of the bankruptcy of the parent holding company, such guarantee would take priority over the parent’s general unsecured creditors.
dividends for either of the prior two years can be offset by retained net income in the current year minus three years or the current year minus four years.
classified as small institutions, and large institutions with assets of greater than $10 billion for more than four consecutive quarters. CIT Bank is an FDIC-insured state nonmember bank with total assets of $21 billion as of December 31, 2014, and is considered a large institution.
fails in any material respect to implement an acceptable compliance plan, the agency must issue an order directing action to correct the deficiency and may issue an order directing other actions of the types to which an undercapitalized institution is subject under the “prompt corrective action” provisions of the FDIA. See “Prompt Corrective Action” above. If an institution fails to comply with such an order, the agency may seek to enforce such order in judicial proceedings and to impose civil monetary penalties.
activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy, or economy of the United States, as well as sanctions based on United Nations and other international mandates.
WHERE YOU CAN FIND MORE INFORMATION
GLOSSARY OF TERMS
can first be carried-back and applied against taxable income recorded in the two preceding years with any remaining amount being carried-forward for the next twenty years to offset future taxable income. The rules pertaining to the number of years allowed for the carryback or carryforward of an NOL varies by jurisdiction.
Item 1A. Risk Factors
underwriting. We may not receive adequate consideration for our dispositions. These transactions, if completed, may reduce the size of our business and we may not be able to replace the lending and leasing activity associated with these businesses. As a result, future disposition of assets could have a material adverse effect on our business, financial condition and results of operations.
poorly designed or implemented models could be inaccurate or misleading. Some of the decisions that our regulators make, including those related to capital distributions to our shareholders, could be affected adversely due to their perception that the quality of the models used to generate the relevant information are insufficient.
loans held for sale. The value to us of other assets such as investment securities, most of which are debt securities or other financial instruments supported by loans, similarly would be negatively impacted by widespread decreases in credit quality resulting from a weakening of the economy. Accordingly, higher credit and collateral related losses and decreases in the value of financial instruments could impact our financial position or operating results.
addition, if we are the owner or former owner of a contaminated site or equipment involved in a hazardous incident, we may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination, property damage, personal injury or other hazardous risks emanating from the property or related to the equipment. If we become subject to significant environmental liabilities or claims for negligence, property damage, or personal injury, our financial condition and results of operations could be adversely affected.
other entities with whom we do business or on whom we otherwise rely or attacks on financial or other institutions important to the overall functioning of the financial system could adversely affect, directly or indirectly, aspects of our business.
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
Item 5. | Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities |
2014 | 2013 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Common Stock | High | Low | High | Low | |||||||||||||||
First Quarter | $ | 52.15 | $ | 45.46 | $ | 44.72 | $ | 39.04 | |||||||||||
Second Quarter | $ | 49.89 | $ | 41.52 | $ | 47.56 | $ | 40.88 | |||||||||||
Third Quarter | $ | 49.73 | $ | 43.50 | $ | 51.33 | $ | 46.84 | |||||||||||
Fourth Quarter | $ | 49.45 | $ | 44.15 | $ | 52.13 | $ | 47.21 |
Declaration Date | Per Share Dividend | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
January | $ | 0.10 | ||||||||||||||||
April | $ | 0.10 | ||||||||||||||||
July | $ | 0.15 | ||||||||||||||||
October | $ | 0.15 |
Number of Securities to be Issued Upon Exercise of Outstanding Options | Weighted-Average Exercise Price of Outstanding Options | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity compensation plan approved by the Court | 59,095 | $ | 31.23 | 5,185,306 | * |
* | Excludes the number of securities to be issued upon exercise of outstanding options and 2,293,739 shares underlying outstanding awards granted to employees and/or directors that are unvested and/or unsettled. |
Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of the Publicly Announced Program | Total Dollar Amount Purchased Under the Program | Approximate Dollar Value of Shares that May Yet be Purchased Under the Program | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(dollars in millions) | (dollars in millions) | ||||||||||||||||||||||
2013(1) | 4,006,941 | $ | 193.4 | $ | — | ||||||||||||||||||
2014 – First Quarter Purchases(2) | 2,905,348 | $ | 135.6 | ||||||||||||||||||||
2014 – Second Quarter Purchases(2)(3) | 9,409,798 | $ | 416.3 | ||||||||||||||||||||
2014 – Third Quarter Purchases(3) | 2,238,147 | $ | 105.9 | ||||||||||||||||||||
2014 – Fourth Quarter Purchases(3) | |||||||||||||||||||||||
October 1–31, 2014 | 447,847 | $ | 45.76 | 447,847 | $ | 20.5 | |||||||||||||||||
November 1–30, 2014 | — | $ | — | — | — | ||||||||||||||||||
December 1–31, 2014 | 2,066,508 | $ | 46.94 | 2,066,508 | 97.0 | ||||||||||||||||||
2,514,355 | $ | 46.73 | 2,514,355 | $ | 117.5 | ||||||||||||||||||
Year to date – December 31, 2014(3) | 17,067,648 | $ | 775.3 | $ | 326.6 |
(1) | Shares repurchased were subject to a $200 million total that expired on December 31, 2013. |
(2) | Shares repurchased were subject to a $607 million total that expired on December 31, 2014. |
(3) | Remaining share repurchases are subject to a $500 million total that expires on June 30, 2015. |
Item 6. Selected Financial Data
At or for the Years Ended December 31, | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||||||
Select Statement of Operations Data | |||||||||||||||||||||||
Net interest revenue | $ | 140.3 | $ | 194.3 | $ | (1,271.7 | ) | $ | (532.3 | ) | $ | 542.6 | |||||||||||
Provision for credit losses | (100.1 | ) | (64.9 | ) | (51.4 | ) | (269.7 | ) | (802.1 | ) | |||||||||||||
Total non-interest income | 2,398.4 | 2,278.7 | 2,515.5 | 2,739.8 | 2,760.0 | ||||||||||||||||||
Total other expenses | (1,757.8 | ) | (1,673.9 | ) | (1,607.8 | ) | (1,691.9 | ) | (1,756.4 | ) | |||||||||||||
Income (loss) from continuing operations | 1,077.5 | 644.4 | (535.8 | ) | 83.9 | 502.9 | |||||||||||||||||
Net income (loss) | 1,130.0 | 675.7 | (592.3 | ) | 14.8 | 521.3 | |||||||||||||||||
Per Common Share Data | |||||||||||||||||||||||
Diluted income (loss) per common share – continuing operations | $ | 5.69 | $ | 3.19 | $ | (2.67 | ) | $ | 0.42 | $ | 2.51 | ||||||||||||
Diluted income (loss) per common share | $ | 5.96 | $ | 3.35 | $ | (2.95 | ) | $ | 0.07 | $ | 2.60 | ||||||||||||
Book value per common share | $ | 50.13 | $ | 44.78 | $ | 41.49 | $ | 44.27 | $ | 44.54 | |||||||||||||
Tangible book value per common share | $ | 46.83 | $ | 42.98 | $ | 39.61 | $ | 42.23 | $ | 42.17 | |||||||||||||
Dividends declared per common share | $ | 0.50 | $ | 0.10 | – | – | – | ||||||||||||||||
Dividend payout ratio | 8.4 | % | 3.0 | % | – | – | – | ||||||||||||||||
Performance Ratios | |||||||||||||||||||||||
Return on average common stockholders’ equity | 12.8 | % | 7.8 | % | (7.0 | )% | 0.2 | % | 6.0 | % | |||||||||||||
Net finance revenue as a percentage of average earning assets | 4.25 | % | 4.61 | % | (0.09 | )% | 2.09 | % | 4.74 | % | |||||||||||||
Return on average continuing operations total assets | 2.37 | % | 1.56 | % | (1.38 | )% | 0.21 | % | 1.08 | % | |||||||||||||
Total ending equity to total ending assets | 18.9 | % | 18.8 | % | 18.9 | % | 19.6 | % | 17.4 | % | |||||||||||||
Balance Sheet Data | |||||||||||||||||||||||
Loans including receivables pledged | $ | 19,495.0 | $ | 18,629.2 | $ | 17,153.1 | $ | 15,225.8 | $ | 16,612.9 | |||||||||||||
Allowance for loan losses | (346.4 | ) | (356.1 | ) | (379.3 | ) | (407.8 | ) | (416.2 | ) | |||||||||||||
Operating lease equipment, net | 14,930.4 | 13,035.4 | 12,411.7 | 12,006.4 | 11,155.0 | ||||||||||||||||||
Goodwill and intangible assets, net | 571.3 | 334.6 | 345.9 | 345.9 | 355.6 | ||||||||||||||||||
Total cash and short-term investments | 8,223.9 | 7,532.5 | 7,477.1 | 8,264.3 | 11,070.5 | ||||||||||||||||||
Assets of discontinued operation | – | 3,821.4 | 4,202.6 | 7,021.8 | 8,555.1 | ||||||||||||||||||
Total assets | 47,880.0 | 47,139.0 | 44,012.0 | 45,263.4 | 51,453.4 | ||||||||||||||||||
Deposits | 15,849.8 | 12,526.5 | 9,684.5 | 6,193.7 | 4,536.2 | ||||||||||||||||||
Long-term borrowings | 18,455.8 | 18,484.5 | 18,330.9 | 21,743.9 | 29,303.9 | ||||||||||||||||||
Liabilities of discontinued operation | – | 3,277.6 | 3,648.8 | 4,595.4 | 4,798.4 | ||||||||||||||||||
Total common stockholders’ equity | 9,068.9 | 8,838.8 | 8,334.8 | 8,883.6 | 8,929.0 | ||||||||||||||||||
Credit Quality | |||||||||||||||||||||||
Non-accrual loans as a percentage of finance receivables | 0.82 | % | 1.29 | % | 1.92 | % | 4.61 | % | 9.73 | % | |||||||||||||
Net charge-offs as a percentage of average finance receivables | 0.52 | % | 0.44 | % | 0.46 | % | 1.70 | % | 2.07 | % | |||||||||||||
Allowance for loan losses as a percentage of finance receivables | 1.78 | % | 1.91 | % | 2.21 | % | 2.68 | % | 2.51 | % | |||||||||||||
Financial Ratios | |||||||||||||||||||||||
Tier 1 Capital Ratio | 14.5 | % | 16.7 | % | 16.2 | % | 18.8 | % | 19.0 | % | |||||||||||||
Total Capital Ratio | 15.2 | % | 17.4 | % | 17.0 | % | 19.7 | % | 19.9 | % |
December 31, 2014 | December 31, 2013 | December 31, 2012 | �� | ||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Average Balance | Interest | Average Rate (%) | Average Balance | Interest | Average Rate (%) | Average Balance | Interest | Average Rate (%) | |||||||||||||||||||||||||||||
Interest bearing deposits | $ | 5,343.0 | $ | 17.7 | 0.33 | % | $ | 5,531.6 | $ | 16.6 | 0.30 | % | $ | 6,420.1 | $ | 21.7 | 0.34 | % | |||||||||||||||||||
Securities purchased under agreements to resell | 242.3 | 1.3 | 0.54 | % | – | – | – | – | – | – | |||||||||||||||||||||||||||
Investment securities | 1,667.8 | 16.5 | 0.99 | % | 1,886.0 | 12.3 | 0.65 | % | 1,316.7 | 10.5 | 0.80 | % | |||||||||||||||||||||||||
Loans (including held for sale)(2)(3) | |||||||||||||||||||||||||||||||||||||
U.S.(2) | 16,759.1 | 905.1 | 5.88 | % | 14,618.0 | 855.3 | 6.40 | % | 12,403.4 | 953.5 | 8.51 | % | |||||||||||||||||||||||||
Non-U.S. | 3,269.0 | 285.9 | 8.75 | % | 4,123.6 | 371.0 | 9.00 | % | 4,029.1 | 408.3 | 10.13 | % | |||||||||||||||||||||||||
Total loans(2) | 20,028.1 | 1,191.0 | 6.38 | % | 18,741.6 | 1,226.3 | 7.01 | % | 16,432.5 | 1,361.8 | 8.94 | % | |||||||||||||||||||||||||
Total interest earning assets / interest income(2)(3) | 27,281.2 | 1,226.5 | 4.73 | % | 26,159.2 | 1,255.2 | 5.04 | % | 24,169.3 | 1,394.0 | 6.07 | % | |||||||||||||||||||||||||
Operating lease equipment, net (including held for sale)(4) | |||||||||||||||||||||||||||||||||||||
U.S.(4) | 7,755.0 | 689.6 | 8.89 | % | 6,559.0 | 613.1 | 9.35 | % | 6,139.0 | 596.9 | 9.72 | % | |||||||||||||||||||||||||
Non-U.S.(4) | 7,022.3 | 590.9 | 8.41 | % | 6,197.1 | 580.6 | 9.37 | % | 6,299.0 | 651.3 | 10.34 | % | |||||||||||||||||||||||||
Total operating lease equipment, net(4) | 14,777.3 | 1,280.5 | 8.67 | % | 12,756.1 | 1,193.7 | 9.36 | % | �� | 12,438.0 | 1,248.2 | 10.04 | % | ||||||||||||||||||||||||
Total earning assets(2) | 42,058.5 | $ | 2,507.0 | 6.16 | % | 38,915.3 | $ | 2,448.9 | 6.50 | % | 36,607.3 | $ | 2,642.2 | 7.46 | % | ||||||||||||||||||||||
Non interest earning assets | |||||||||||||||||||||||||||||||||||||
Cash due from banks | 945.0 | 522.1 | 441.2 | ||||||||||||||||||||||||||||||||||
Allowance for loan losses | (349.6 | ) | (367.8 | ) | (405.1 | ) | |||||||||||||||||||||||||||||||
All other non-interest earning assets | 2,720.5 | 2,215.3 | 2,228.2 | ||||||||||||||||||||||||||||||||||
Assets of discontinued operation | 1,167.2 | 4,016.3 | 5,420.7 | ||||||||||||||||||||||||||||||||||
Total Average Assets | $ | 46,541.6 | $ | 45,301.2 | $ | 44,292.3 | |||||||||||||||||||||||||||||||
Average Liabilities | |||||||||||||||||||||||||||||||||||||
Borrowings | |||||||||||||||||||||||||||||||||||||
Deposits | $ | 13,955.8 | $ | 231.0 | 1.66 | % | $ | 11,212.1 | $ | 179.8 | 1.60 | % | $ | 7,707.9 | $ | 152.5 | 1.98 | % | |||||||||||||||||||
Long-term borrowings(5) | 18,582.0 | 855.2 | 4.60 | % | 18,044.5 | 881.1 | 4.88 | % | 19,964.5 | 2,513.2 | 12.59 | % | |||||||||||||||||||||||||
Total interest-bearing liabilities | 32,537.8 | $ | 1,086.2 | 3.34 | % | 29,256.6 | $ | 1,060.9 | 3.63 | % | 27,672.4 | $ | 2,665.7 | 9.63 | % | ||||||||||||||||||||||
Credit balances of factoring clients | 1,368.5 | 1,258.6 | 1,194.4 | ||||||||||||||||||||||||||||||||||
Other non-interest bearing liabilities | 2,791.7 | 2,638.2 | 2,642.7 | ||||||||||||||||||||||||||||||||||
Liabilities of discontinued operation | 997.2 | 3,474.2 | 4,293.8 | ||||||||||||||||||||||||||||||||||
Noncontrolling interests | 7.0 | 9.2 | 5.0 | ||||||||||||||||||||||||||||||||||
Stockholders’ equity | 8,839.4 | 8,664.4 | 8,484.0 | ||||||||||||||||||||||||||||||||||
Total Average Liabilities and Stockholders’ Equity | $ | 46,541.6 | $ | 45,301.2 | $ | 44,292.3 | |||||||||||||||||||||||||||||||
Net revenue spread | 2.82 | % | 2.87 | % | (2.17 | )% | |||||||||||||||||||||||||||||||
Impact of non-interest bearing sources | 0.67 | % | 0.82 | % | 2.10 | % | |||||||||||||||||||||||||||||||
Net revenue/yield on earning assets(2) | $ | 1,420.8 | 3.49 | % | $ | 1,388.0 | 3.69 | % | $ | (23.5 | ) | (0.07 | )% |
(1) | The average balances presented are derived based on month end balances during the year. Tax exempt income was not significant in any of the years presented. Average rates are impacted by FSA accretion and amortization. |
(2) | The 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) | Interest and average rates include FSA accretion, including amounts accelerated due to redemptions or extinguishments, and accelerated original issue discount on debt extinguishment related to the GSI facility. |
2014 Compared to 2013 | 2013 Compared to 2012 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Increase (decrease) due to change in: | Increase (decrease) due to change in: | ||||||||||||||||||||||||||
Volume | Rate | Net | Volume | Rate | Net | ||||||||||||||||||||||
Interest Income | |||||||||||||||||||||||||||
Loans (including held for sale) | |||||||||||||||||||||||||||
U.S. | $ | 125.9 | $ | (76.1 | ) | $ | 49.8 | $ | 141.7 | $ | (239.9 | ) | $ | (98.2 | ) | ||||||||||||
Non-U.S. | (74.8 | ) | (10.3 | ) | (85.1 | ) | 8.5 | (45.8 | ) | (37.3 | ) | ||||||||||||||||
Total loans | 51.1 | (86.4 | ) | (35.3 | ) | 150.2 | (285.7 | ) | (135.5 | ) | |||||||||||||||||
Interest bearing deposits | (0.6 | ) | 1.7 | 1.1 | (2.7 | ) | (2.4 | ) | (5.1 | ) | |||||||||||||||||
Securities purchased under agreements to resell | 1.3 | – | 1.3 | – | – | – | |||||||||||||||||||||
Investments | (2.2 | ) | 6.4 | 4.2 | 3.7 | (1.9 | ) | 1.8 | |||||||||||||||||||
Interest income | 49.6 | (78.3 | ) | (28.7 | ) | 151.2 | (290.0 | ) | (138.8 | ) | |||||||||||||||||
Operating lease equipment, net (including held for sale)(1) | 175.7 | (88.9 | ) | 86.8 | 29.7 | (84.2 | ) | (54.5 | ) | ||||||||||||||||||
Interest Expense | |||||||||||||||||||||||||||
Interest on deposits | 45.5 | 5.7 | 51.2 | 56.1 | (28.8 | ) | 27.3 | ||||||||||||||||||||
Interest on long-term borrowings(2) | 24.7 | (50.6 | ) | (25.9 | ) | (93.7 | ) | (1,538.4 | ) | (1,632.1 | ) | ||||||||||||||||
Interest expense | 70.2 | (44.9 | ) | 25.3 | (37.6 | ) | (1,567.2 | ) | (1,604.8 | ) | |||||||||||||||||
Net finance revenue | $ | 155.1 | $ | (122.3 | ) | $ | 32.8 | $ | 218.5 | $ | 1,193.0 | $ | 1,411.5 |
(1) | Operating lease rental income is a significant source of revenue; therefore, we have presented the net revenues. |
(2) | Includes acceleration of FSA accretion resulting from redemptions or extinguishments and accelerated original issue discount on debt extinguishment related to the TRS facility. |
Years Ended | |||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2014 | December 31, 2013 | December 31, 2012 | |||||||||||||||||||||||||||||||||||||
Unsecured | Average Balance | Interest | Average Rate (%) | Average Balance | Interest | Average Rate (%) | Average Balance | Interest | Average Rate (%) | ||||||||||||||||||||||||||||||
Revolving Credit Facility(1) | $ | – | $ | 14.1 | – | $ | – | $ | 15.6 | – | $ | 284.1 | $ | 18.6 | 6.56 | % | |||||||||||||||||||||||
Senior Unsecured Notes | 12,382.9 | 635.0 | 5.13 | % | 12,107.0 | 660.0 | 5.45 | % | 12,957.2 | 1,613.8 | 12.45 | % | |||||||||||||||||||||||||||
Secured borrowings | 6,184.0 | 206.1 | 3.33 | % | 5,938.8 | 205.5 | 3.46 | % | 6,121.9 | 197.0 | 3.22 | % | |||||||||||||||||||||||||||
Series A Notes | – | – | – | – | – | – | 856.2 | 683.8 | 79.86 | % | |||||||||||||||||||||||||||||
Total Long-term Borrowings | $ | 18,566.9 | $ | 855.2 | 4.61 | % | $ | 18,045.8 | $ | 881.1 | 4.88 | % | $ | 20,219.4 | $ | 2,513.2 | 12.43 | % |
(1) | Interest expense and average rate includes Facility commitment fees and amortization of Facility deal costs. |
Item 7: Management’s Discussion and Analysis of Financial Condition and Results
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Pre-tax income/(loss) from continuing operations | $ | 680.8 | $ | 734.2 | $ | (415.4 | ) | ||||||||
Accelerated FSA net discount/(premium) on debt extinguishments and repurchases | 34.7 | 34.6 | 1,294.9 | ||||||||||||
Debt related – loss on debt extinguishments | 3.5 | – | 61.2 | ||||||||||||
Accelerated OID on debt extinguishments related to the GSI facility | (42.0 | ) | (5.2 | ) | (6.9 | ) | |||||||||
Debt redemption charges and OID acceleration | (3.8 | ) | 29.4 | 1,349.2 | |||||||||||
Pre-tax income from continuing operations – excluding debt redemption charges and OID acceleration(1) | $ | 677.0 | $ | 763.6 | $ | 933.8 |
(1) | Pre-tax income from continuing operations excluding debt redemption charges and loss on debt extinguishments is a non-GAAP measure. See “Non-GAAP Financial Measurements” for reconciliation of non-GAAP to GAAP financial information. |
(2) | Net finance revenue is a non-GAAP measure; see “Non-GAAP Financial Measurements” for a reconciliation of non-GAAP to GAAP financial information. |
(3) | Average earning assets is a non-GAAP measure; see “Non-GAAP Financial Measurements” for a reconciliation of non-GAAP to GAAP financial information. |
(4) | Net finance margin excluding debt redemption charges is a non-GAAP measure. See “Non-GAAP Financial Measurements” for reconciliation of non-GAAP to GAAP financial information. Debt redemption charges include accelerated fresh start accounting debt discount amortization, accelerated original issue discount (“OID”) on debt extinguishment related to the GSI facility, and prepayment costs. |
(5) | Operating expenses excluding restructuring charges is a non-GAAP measure; see “Non-GAAP Financial Measurements” for reconciliation of non-GAAP to GAAP financial information. |
(6) | Total assets from continuing operations is a non-GAAP measure. See “Non-GAAP Measurements” for reconciliation of non-GAAP to GAAP financial information. |
1. | Grow Earning Assets |
- | Financing and leasing assets (“FLA”) totaled $35.6 billion, up from $32.7 billion at December 31, 2013. TIF and NACF comprise the vast majority of the assets and totaled $35.3 billion, up $3.9 billion from December 31, 2013, driven by solid origination volumes, supplemented by $1.2 billion of financing and leasing assets from acquisitions (at the time of the acquisitions). NSP makes up the remaining balance of FLA, which declined $0.9 billion during 2014, and is expected to continue to decline as portfolios are sold or liquidated. |
2. | Achieve Profit Targets |
- | NFM of 4.25% was at the high end of our near-term outlook range of 3.75%-4.25%, benefiting from lower funding costs, suspended depreciation, interest recoveries and prepayments, but pressured by portfolio re-pricing. |
- | Other Income remained within our near-term outlook range of 0.75%-1.00% but was impacted by impairment charges on AHFS. |
- | Operating expenses were $942 million, including restructuring charges of $31 million. Excluding restructuring charges, operating expenses were 2.73% of AEA, above the near-term outlook range of 2.00%-2.50%, but improved from 2013. 2014 included costs associated with our Non-Strategic Portfolios as well as elevated costs from our strategic repositioning, including the Direct Capital and Nacco acquisitions, the OneWest integration planning and international exits. |
- | We made significant progress exiting low-return portfolios in 2014. We exited all the sub-scale portfolios in Asia, Europe and several in Latin America, as well as our Small Business Lending (“SBL”) and Student Loan (“SLX”) portfolios. In addition, we sold a TIF international loan portfolio in the U.K., and transferred another to AHFS. |
3. | Expand Bank Assets and Funding |
- | Total assets were $21.1 billion at December 31, 2014, up from $16.1 billion at December 31, 2013, reflecting new business volume and the acquisition of Direct Capital. CIT Bank funded $7.8 billion of new business volume in 2014, up over 9% from 2013. |
- | Deposits at year end were $15.9 billion, up from $12.5 billion at December 31, 2013. The weighted average rate on outstanding deposits was 1.63% at December 31, 2014, up from 1.55% at December 31, 2013, primarily due to an increase in term deposits with longer maturities. Online deposits grew to 56% of total deposits from 49% in 2013. |
- | On July 22, 2014, CIT announced that it entered into a definitive agreement and plan of merger with IMB Holdco LLC, the parent company of OneWest Bank, N.A. (“OneWest Bank”), for $3.4 billion in cash and stock. At December 31, 2014, OneWest Bank had approximately 70 branches in Southern California, with nearly $22 billion of assets and over $14 billion of deposits. |
4. | Continue to Return Capital |
- | During 2014, we repurchased over 17 million of our shares for an aggregate purchase price of $775 million, at an average price of $45.42. Through January 31, 2015, we repurchased an additional 4.7 million shares for an aggregate purchase price of $212 million. |
- | In 2014, the Board of Directors approved share repurchases in aggregate of $1.1 billion. After the 2015 purchases, $114 million remained of the authorized repurchase capacity that expires on June 30, 2015. |
- | We paid dividends of approximately $95 million in 2014. During 2014 we increased our quarterly dividend by 50% to $0.15 per share and on January 21, 2015, the Board approved CIT’s quarterly cash dividend of $0.15 per share, payable in February 2015. |
- | Expand Our Commercial Banking Franchise — We will work to complete and integrate the OneWest Bank acquisition and enhance our commercial banking operations. |
- | Maintain Strong Risk Management Practices — We will continue to maintain credit discipline focused on maintaining appropriate risk-adjusted returns through the business cycle and continue enhancements in select areas for SIFI Readiness. |
- | Grow Business Franchises — We will concentrate our growth on building franchises that meet or exceed our risk adjusted return hurdles and improve profitability by exiting non-strategic portfolios (mainly Mexico and Brazil, and the equipment finance business in the U.K.). |
- | Realize embedded value — We will focus on enhancing our economic returns, which would improve the utilization of our U.S. NOL, thereby reducing the net deferred tax asset, and increase regulatory capital. |
- | Return Excess Capital — We plan to prudently return capital to our shareholders through share repurchases and dividends, while maintaining strong capital ratios. |
KEY PERFORMANCE METRICS | MEASUREMENTS | |
Asset Generation — to originate new business and grow earning assets. | - New business volumes; and - Financing and leasing assets balances. | |
Revenue Generation — lend money at rates in excess of cost of borrowing and consistent with risk profile of obligor, earn rentals on the equipment we lease commensurate with the risk, and generate other revenue streams. | - Net finance revenue and other income; - Net finance margin; - Asset yields and funding costs; and - Operating lease revenue as a percentage of average operating lease equipment. | |
Credit Risk Management — accurately evaluate credit worthiness of customers, maintain high-quality assets and balance income potential with loss expectations. | - Net charge-offs, balances and as a percentage of AFR; - Non-accrual loans, balances and as a percentage of loans; - Classified assets and delinquencies balances; and - Loan loss reserve, balance and as a percentage of loans. | |
Equipment and Residual Risk Management — appropriately evaluate collateral risk in leasing transactions and remarket or sell equipment at lease termination. | - Equipment utilization; - Market value of equipment relative to book value; and - Gains and losses on equipment sales. | |
Expense Management — maintain efficient operating platforms and related infrastructure. | - Operating expenses and trends; - Operating expenses as a percentage of AEA; and - Gross revenue as a percentage of AEA. | |
Profitability — generate income and appropriate returns to shareholders. | - Net income per common share (EPS); - Net income and pre-tax income, each as a percentage of average earning assets (ROA); and - Pre-tax income as a percentage of average tangible common equity (ROTCE). | |
Capital Management — maintain a strong capital position. | - Tier 1 and Total capital ratios; and - Tier 1 capital as a percentage of adjusted average assets; | |
Liquidity Management — maintain access to ample funding at competitive rates to meet obligations as they come due. | - Levels of cash, securities purchased under resale agreements and certain short term investment securities; - Committed and available funding facilities; - Debt maturity profile; and - Debt ratings. | |
Manage Market Risk — measure and manage risk to income statement and economic value of enterprise due to movements in interest and foreign currency exchange rates. | - Net Interest Income Sensitivity; and - Economic Value of Equity (EVE). |
NET FINANCE REVENUE
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Interest income | $ | 1,226.5 | $ | 1,255.2 | $ | 1,394.0 | |||||||||
Rental income on operating leases | 2,093.0 | 1,897.4 | 1,900.8 | ||||||||||||
Finance revenue | 3,319.5 | 3,152.6 | 3,294.8 | ||||||||||||
Interest expense | (1,086.2 | ) | (1,060.9 | ) | (2,665.7 | ) | |||||||||
Depreciation on operating lease equipment | (615.7 | ) | (540.6 | ) | (513.2 | ) | |||||||||
Maintenance and other operating lease expenses | (196.8 | ) | (163.1 | ) | (139.4 | ) | |||||||||
Net finance revenue | $ | 1,420.8 | $ | 1,388.0 | $ | (23.5 | ) | ||||||||
Average Earning Assets(1)(2) (“AEA”) | $ | 33,394.7 | $ | 30,122.5 | $ | 27,608.6 | |||||||||
As a % of AEA: | |||||||||||||||
Interest income | 3.67 | % | 4.16 | % | 5.05 | % | |||||||||
Rental income on operating leases | 6.27 | % | 6.30 | % | 6.88 | % | |||||||||
Finance revenue | 9.94 | % | 10.46 | % | 11.93 | % | |||||||||
Interest expense | (3.25 | )% | (3.52 | )% | (9.66 | )% | |||||||||
Depreciation on operating lease equipment | (1.85 | )% | (1.79 | )% | (1.86 | )% | |||||||||
Maintenance and other operating lease expenses | (0.59 | )% | (0.54 | )% | (0.50 | )% | |||||||||
Net finance margin | 4.25 | % | 4.61 | % | (0.09 | )% |
(1) | NFR and AEA are non-GAAP measures; see “Non-GAAP Financial Measurements” sections for a reconciliation of non-GAAP to GAAP financial information. |
(2) | AEA are less than comparable balances displayed later in this document in ‘Select Data’ (Average Balances) due to the exclusion of deposits with banks and other investments and the inclusion of credit balances of factoring clients. |
Years Ended December 31, | |||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||||||||||||||
NFR / NFM | $ | 1,420.8 | 4.25 | % | $ | 1,388.0 | 4.61 | % | $ | (23.5 | ) | (0.09 | )% | ||||||||||||||
Accelerated FSA net discount/(premium) on debt extinguishments and repurchases | 34.7 | 0.10 | % | 34.6 | 0.12 | % | 1,294.9 | 4.69 | % | ||||||||||||||||||
Accelerated OID on debt extinguishments related to the GSI facility | (42.0 | ) | (0.12 | )% | (5.2 | ) | (0.02 | )% | (6.9 | ) | (0.02 | )% | |||||||||||||||
Adjusted NFR and NFM | $ | 1,413.5 | 4.23 | % | $ | 1,417.4 | 4.71 | % | $ | 1,264.5 | 4.58 | % |
(1) | Adjusted NFR and NFM are non-GAAP measures; see “Non-GAAP Financial Measurements” for a reconciliation of non-GAAP to GAAP financial information. |
- | Finance revenue rose in 2014 on increased earning assets. However, the margin trends reflect repricing at lower yields, a decline in benefit from FSA accretion and the sale in 2013 of a higher-yielding Dell Europe portfolio (within NSP), which benefited 2013 primarily from suspended depreciation on operating leases. AEA increased 11% from 2013. FSA accretion totaled $31 million in 2014 and $61 million in 2013. The remaining accretable discount was not significant at December 31, 2014. SeeFresh Start Accounting section later in this document. |
- | Funding costs declined. Weighted average coupon rate of outstanding deposits and long-term borrowings was 3.11% at December 31, 2014, down from 3.33% at December 31, 2013, as the portion of our funding derived from deposits increased to 46% from 40% at December 31, 2013. |
- | NFM reflects the mentioned impacts to finance revenue and lower debt costs. During 2014, high levels of interest recoveries and prepayments continued to benefit NFM. NFM also benefited, though at a lower level, from suspended depreciation on operating lease equipment held for sale, as depreciation is not recorded while this equipment is held for sale (detailed further below). As we complete the NSP portfolio sales and aerospace asset sales to TC-CIT Aviation joint venture, the benefit to NFM from suspended depreciation will diminish. |
- | Lower finance revenue in 2013 reflected pressure on certain renewal lease rates in the commercial air portfolio and the sale of the Dell Europe portfolio, which contained higher-yielding assets. AEA increased 9% from 2012. Interest income was down from 2012 reflecting lower FSA accretion, which totaled $61 million in 2013 and $212 million in 2012. |
- | Interest recoveries, which result from events such as prepayments on or sales of non-accrual assets and assets returning to accrual status, and certain other yield-related fees, were elevated in 2012, and moderated in 2013. |
- | NFM benefited from suspended depreciation on operating lease equipment held for sale in 2013, since depreciation is not recorded while this equipment is held for sale. This benefit was down from 2012, primarily due to the sale of the Dell Europe portfolio in the third and fourth quarters. (Amounts detailed below). |
- | Lower funding costs at December 31, 2013 resulted from our liability management actions, which included paying off high cost debt in 2012 and increasing the proportion of deposits in our funding mix, as discussed further below. |
- | Net FSA accretion (excluding accelerated FSA on debt extinguishments and repurchases noted in the above table) increased NFR by $212 million in 2013 and $238 million in 2012. |
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Transportation & International Finance | |||||||||||||||
AEA | $ | 18,243.0 | $ | 15,434.6 | $ | 14,269.2 | |||||||||
Gross yield | 12.33 | % | 12.55 | % | 13.21 | % | |||||||||
NFM | 4.84 | % | 4.89 | % | 0.02 | % | |||||||||
Adjusted NFM | 4.80 | % | 4.99 | % | 4.45 | % | |||||||||
AEA | |||||||||||||||
Aerospace | $ | 10,467.4 | $ | 9,317.9 | $ | 9,358.3 | |||||||||
Rail | $ | 5,581.9 | $ | 4,332.4 | $ | 3,905.3 | |||||||||
Maritime Finance | $ | 670.0 | $ | 300.1 | $ | – | |||||||||
International Finance | $ | 1,523.7 | $ | 1,484.2 | $ | 1,005.6 | |||||||||
Gross yield | |||||||||||||||
Aerospace | 12.00 | % | 12.23 | % | 12.53 | % | |||||||||
Rail | 14.75 | % | 14.69 | % | 14.87 | % | |||||||||
Maritime Finance | 5.18 | % | 7.83 | % | – | ||||||||||
International Finance | 8.92 | % | 9.30 | % | 13.01 | % | |||||||||
North American Commercial Finance | |||||||||||||||
AEA | $ | 14,319.5 | $ | 12,916.2 | $ | 11,362.7 | |||||||||
Gross yield | 6.49 | % | 7.22 | % | 9.47 | % | |||||||||
NFM | 3.93 | % | 4.44 | % | 2.23 | % | |||||||||
Adjusted NFM | 3.93 | % | 4.50 | % | 6.06 | % | |||||||||
AEA | |||||||||||||||
Real Estate Finance | $ | 1,687.6 | $ | 1,119.0 | $ | 257.5 | |||||||||
Corporate Finance | $ | 7,138.2 | $ | 6,710.2 | $ | 6,229.5 | |||||||||
Equipment Finance | $ | 4,526.4 | $ | 4,083.3 | $ | 3,787.8 | |||||||||
Commercial Services | $ | 967.3 | $ | 1,003.7 | $ | 1,087.9 | |||||||||
Gross yield | |||||||||||||||
Real Estate Finance | 4.15 | % | 4.19 | % | 4.01 | % | |||||||||
Corporate Finance | 5.30 | % | 5.80 | % | 8.15 | % | |||||||||
Equipment Finance | 9.53 | % | 10.82 | % | 13.20 | % | |||||||||
Commercial Services | 5.18 | % | 5.47 | % | 5.30 | % | |||||||||
Non-Strategic Portfolios | |||||||||||||||
AEA | $ | 832.2 | $ | 1,771.7 | $ | 1,976.7 | |||||||||
Gross yield | 15.16 | % | 15.14 | % | 15.96 | % | |||||||||
NFM | 3.57 | % | 5.97 | % | 1.14 | % | |||||||||
Adjusted NFM | 3.57 | % | 6.27 | % | 3.14 | % |
Years Ended December 31, | |||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||||||||||||||
Rental income on operating leases | $ | 2,093.0 | 14.41 | % | $ | 1,897.4 | 15.22 | % | $ | 1,900.8 | 15.74 | % | |||||||||||||||
Depreciation on operating lease equipment | (615.7 | ) | (4.24 | )% | (540.6 | ) | (4.33 | )% | (513.2 | ) | (4.25 | )% | |||||||||||||||
Maintenance and other operating lease expenses | (196.8 | ) | (1.35 | )% | (163.1 | ) | (1.31 | )% | (139.4 | ) | (1.15 | )% | |||||||||||||||
Net operating lease revenue and % of AOL | $ | 1,280.5 | 8.82 | % | $ | 1,193.7 | 9.58 | % | $ | 1,248.2 | 10.34 | % | |||||||||||||||
Average Operating Lease Equipment (“AOL”) | $ | 14,524.4 | $ | 12,463.8 | $ | 12,072.9 |
(7) | Net operating lease revenue is a non-GAAP measure. See “Non-GAAP Financial Measurements” for a reconciliation of non-GAAP to GAAP financial information. |
CREDIT METRICS
Years ended December 31, | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||||||
Allowance – beginning of period | $ | 356.1 | $ | 379.3 | $ | 407.8 | $ | 416.2 | $ | – | |||||||||||||
Provision for credit losses(1) | 100.1 | 64.9 | 51.4 | 269.7 | 802.1 | ||||||||||||||||||
Change related to new accounting guidance(2) | – | – | – | – | 68.6 | ||||||||||||||||||
Other(1) | (10.7 | ) | (7.4 | ) | (5.8 | ) | (12.9 | ) | (8.2 | ) | |||||||||||||
Net additions | 89.4 | 57.5 | 45.6 | 256.8 | 862.5 | ||||||||||||||||||
Gross charge-offs(3) | (127.5 | ) | (138.6 | ) | (141.7 | ) | (368.8 | ) | (492.0 | ) | |||||||||||||
Recoveries(4) | 28.4 | 57.9 | 67.6 | 103.6 | 45.7 | ||||||||||||||||||
Net Charge-offs | (99.1 | ) | (80.7 | ) | (74.1 | ) | (265.2 | ) | (446.3 | ) | |||||||||||||
Allowance – end of period | $ | 346.4 | $ | 356.1 | $ | 379.3 | $ | 407.8 | $ | 416.2 | |||||||||||||
Provision for credit losses | |||||||||||||||||||||||
Specific reserves on impaired loans | $ | (18.0 | ) | $ | (14.8 | ) | $ | (9.4 | ) | $ | (66.7 | ) | $ | 121.3 | |||||||||
Non-specific reserves | 19.0 | (1.0 | ) | (13.3 | ) | 71.2 | 234.5 | ||||||||||||||||
Net charge-offs | 99.1 | 80.7 | 74.1 | 265.2 | 446.3 | ||||||||||||||||||
Total | $ | 100.1 | $ | 64.9 | $ | 51.4 | $ | 269.7 | $ | 802.1 | |||||||||||||
Allowance for loan losses | |||||||||||||||||||||||
Specific reserves on impaired loans | $ | 12.4 | $ | 30.4 | $ | 45.2 | $ | 54.6 | $ | 121.3 | |||||||||||||
Non-specific reserves | 334.0 | 325.7 | 334.1 | 353.2 | 294.9 | ||||||||||||||||||
Total | $ | 346.4 | $ | 356.1 | $ | 379.3 | $ | 407.8 | $ | 416.2 | |||||||||||||
Ratio | |||||||||||||||||||||||
Allowance for loan losses as a percentage of total loans | 1.78 | % | 1.91 | % | 2.21 | % | 2.68 | % | 2.51 | % |
(1) | The provision for credit losses includes amounts related to reserves on unfunded loan commitments, unused letters of credit, and for deferred purchase agreements, all of which are reflected in other liabilities, as well as foreign currency translation adjustments. The items included in other liabilities totaled $35 million, $28 million, $23 million, $22 million and $12 million at December 31, 2014, 2013, 2012, 2011 and 2010, respectively. |
(2) | Reflects reserves associated with loans consolidated in accordance with 2010 adoption of accounting guidance on consolidation of variable interest entities. |
(3) | Gross charge-offs included $43 million and $39 million of charge-offs related to the transfer of receivables to assets held for sale for the year ended December 31, 2014 and 2013, respectively. Prior year amounts were not significant. |
(4) | Recoveries for the years ended December 31, 2014, 2013, 2012, 2011 and 2010 do not include $20 million, $22 million, $54 million, $124 million and $279 million, respectively, of recoveries of loans charged off pre-emergence and loans charged off prior to the transfer to assets held for sale, which are included in Other Income. |
Finance Receivables | Allowance for Loan Losses | Net Carrying Value | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2014 | ||||||||||||||
Transportation & International Finance | $ | 3,558.9 | $ | (46.8 | ) | $ | 3,512.1 | |||||||
North American Commercial Finance | 15,936.0 | (299.6 | ) | 15,636.4 | ||||||||||
Non-Strategic Portfolio | 0.1 | – | 0.1 | |||||||||||
Total | $ | 19,495.0 | $ | (346.4 | ) | $ | 19,148.6 | |||||||
December 31, 2013 | ||||||||||||||
Transportation & International Finance | $ | 3,494.4 | $ | (46.7 | ) | $ | 3,447.7 | |||||||
North American Commercial Finance | 14,693.1 | (303.8 | ) | 14,389.3 | ||||||||||
Non-Strategic Portfolio | 441.7 | (5.6 | ) | 436.1 | ||||||||||
Total | $ | 18,629.2 | $ | (356.1 | ) | $ | 18,273.1 | |||||||
December 31, 2012 | ||||||||||||||
Transportation & International Finance | $ | 2,556.5 | $ | (44.3 | ) | $ | 2,512.2 | |||||||
North American Commercial Finance | 13,084.4 | (293.7 | ) | 12,790.7 | ||||||||||
Non-Strategic Portfolio | 1,512.2 | (41.3 | ) | 1,470.9 | ||||||||||
Total | $ | 17,153.1 | $ | (379.3 | ) | $ | 16,773.8 | |||||||
December 31, 2011 | ||||||||||||||
Transportation & International Finance | $ | 1,848.1 | $ | (36.3 | ) | $ | 1,811.8 | |||||||
North American Commercial Finance | 11,894.7 | (309.8 | ) | 11,584.9 | ||||||||||
Non-Strategic Portfolio | 1,483.0 | (61.7 | ) | 1,421.3 | ||||||||||
Total | $ | 15,225.8 | $ | (407.8 | ) | $ | 14,818.0 | |||||||
December 31, 2010 | ||||||||||||||
Transportation & International Finance | $ | 1,754.5 | $ | (22.6 | ) | $ | 1,731.9 | |||||||
North American Commercial Finance | 13,238.2 | (313.7 | ) | 12,924.5 | ||||||||||
Non-Strategic Portfolio | 1,620.2 | (79.9 | ) | 1,540.3 | ||||||||||
Total | $ | 16,612.9 | $ | (416.2 | ) | $ | 16,196.7 |
Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | 2011 | 2010 | ||||||||||||||||||||||||||||||||||||||
Gross Charge-offs | ||||||||||||||||||||||||||||||||||||||||||
Transportation Finance | $ | 0.7 | 0.03 | % | $ | – | – | $ | 0.9 | 0.08 | % | $ | 1.1 | 0.11 | % | $ | 4.8 | 0.36% | ||||||||||||||||||||||||
International Finance | 44.1 | 3.34 | % | 26.0 | 1.76 | % | 14.8 | 1.50 | % | 16.9 | 2.48 | % | 33.0 | 9.08% | ||||||||||||||||||||||||||||
Transportation & International Finance(1) | 44.8 | 1.25 | % | 26.0 | 0.84 | % | 15.7 | 0.71 | % | 18.0 | 1.06 | % | 37.8 | 2.21% | ||||||||||||||||||||||||||||
Corporate Finance | 29.7 | 0.42 | % | 21.9 | 0.33 | % | 37.8 | 0.61 | % | 147.9 | 2.58 | % | 130.4 | 1.62% | ||||||||||||||||||||||||||||
Equipment Finance | 35.8 | 0.84 | % | 32.0 | 0.82 | % | 52.5 | 1.44 | % | 125.8 | 3.03 | % | 126.1 | 1.66% | ||||||||||||||||||||||||||||
Real Estate Finance | – | – | – | – | – | – | 6.7 | 35.14 | % | 24.7 | 15.16% | |||||||||||||||||||||||||||||||
Commercial Services | 9.7 | 0.41 | % | 4.4 | 0.19 | % | 8.6 | 0.36 | % | 21.1 | 0.85 | % | 29.8 | 1.12% | ||||||||||||||||||||||||||||
North American Commercial Finance(2) | 75.2 | 0.49 | % | 58.3 | 0.42 | % | 98.9 | 0.80 | % | 301.5 | 2.44 | % | 311.0 | 1.68% | ||||||||||||||||||||||||||||
Non-Strategic Portfolio(3) | 7.5 | 4.91 | % | 54.3 | 4.82 | % | 27.1 | 1.81 | % | 49.3 | 3.23 | % | 143.2 | 10.21% | ||||||||||||||||||||||||||||
Total | $ | 127.5 | 0.67 | % | $ | 138.6 | 0.76 | % | $ | 141.7 | 0.88 | % | $ | 368.8 | 2.36 | % | $ | 492.0 | 2.28% | |||||||||||||||||||||||
Recoveries | ||||||||||||||||||||||||||||||||||||||||||
Transportation Finance | $ | 0.2 | 0.01 | % | $ | 1.1 | 0.07 | % | $ | – | – | $ | 0.1 | 0.01 | % | $ | – | – | ||||||||||||||||||||||||
International Finance | 6.9 | 0.53 | % | 8.0 | 0.54 | % | 8.7 | 0.88 | % | 5.8 | 0.85 | % | 4.2 | 1.16% | ||||||||||||||||||||||||||||
Transportation & International Finance | 7.1 | 0.19 | % | 9.1 | 0.29 | % | 8.7 | 0.39 | % | 5.9 | 0.35 | % | 4.2 | 0.24% | ||||||||||||||||||||||||||||
Corporate Finance | 0.5 | 0.01 | % | 8.0 | 0.12 | % | 8.3 | 0.13 | % | 22.4 | 0.39 | % | 8.2 | 0.10% | ||||||||||||||||||||||||||||
Equipment Finance | 16.4 | 0.38 | % | 24.0 | 0.61 | % | 30.3 | 0.83 | % | 42.9 | 1.03 | % | 16.3 | 0.22% | ||||||||||||||||||||||||||||
Real Estate Finance | – | – | – | – | – | – | 4.0 | 20.89 | % | 0.2 | 0.18% | |||||||||||||||||||||||||||||||
Commercial Services | 2.1 | 0.09 | % | 7.8 | 0.33 | % | 7.8 | 0.33 | % | 10.9 | 0.44 | % | 1.2 | 0.04% | ||||||||||||||||||||||||||||
North American Commercial Finance | 19.0 | 0.13 | % | 39.8 | 0.29 | % | 46.4 | 0.38 | % | 80.2 | 0.65 | % | 25.9 | 0.14% | ||||||||||||||||||||||||||||
Non-Strategic Portfolio | 2.3 | 1.44 | % | 9.0 | 0.81 | % | 12.5 | 0.83 | % | 17.5 | 1.15 | % | 15.6 | 1.11% | ||||||||||||||||||||||||||||
Total | $ | 28.4 | 0.15 | % | $ | 57.9 | 0.32 | % | $ | 67.6 | 0.42 | % | $ | 103.6 | 0.66 | % | $ | 45.7 | 0.21% | |||||||||||||||||||||||
Net Charge-offs | ||||||||||||||||||||||||||||||||||||||||||
Transportation Finance | $ | 0.5 | 0.02 | % | $ | (1.1 | ) | (0.07 | )% | $ | 0.9 | 0.08 | % | $ | 1.0 | 0.10 | % | $ | 4.8 | 0.36% | ||||||||||||||||||||||
International Finance | 37.2 | 2.81 | % | 18.0 | 1.22 | % | 6.1 | 0.62 | % | 11.1 | 1.63 | % | 28.8 | 7.92% | ||||||||||||||||||||||||||||
Transportation & International Finance(1) | 37.7 | 1.06 | % | 16.9 | 0.55 | % | 7.0 | 0.32 | % | 12.1 | 0.71 | % | 33.6 | 1.97% | ||||||||||||||||||||||||||||
Corporate Finance | 29.2 | 0.41 | % | 13.9 | 0.21 | % | 29.5 | 0.48 | % | 125.5 | 2.19 | % | 122.2 | 1.52% | ||||||||||||||||||||||||||||
Equipment Finance | 19.4 | 0.46 | % | 8.0 | 0.21 | % | 22.2 | 0.61 | % | 82.9 | 2.00 | % | 109.8 | 1.44% | ||||||||||||||||||||||||||||
Real Estate Finance | – | – | – | – | – | – | 2.7 | 14.25 | % | 24.5 | 14.98% | |||||||||||||||||||||||||||||||
Commercial Services | 7.6 | 0.32 | % | (3.4 | ) | (0.14 | )% | 0.8 | 0.03 | % | 10.2 | 0.41 | % | 28.6 | 1.08% | |||||||||||||||||||||||||||
North American Commercial Finance(2) | 56.2 | 0.36 | % | 18.5 | 0.13 | % | 52.5 | 0.42 | % | 221.3 | 1.79 | % | 285.1 | 1.54% | ||||||||||||||||||||||||||||
Non-Strategic Portfolio(3) | 5.2 | 3.47 | % | 45.3 | 4.01 | % | 14.6 | 0.98 | % | 31.8 | 2.08 | % | 127.6 | 9.10% | ||||||||||||||||||||||||||||
Total | $ | 99.1 | 0.52 | % | $ | 80.7 | 0.44 | % | $ | 74.1 | 0.46 | % | $ | 265.2 | 1.70 | % | $ | 446.3 | 2.07% |
(1) | TIF charge-offs for 2014 and 2013 included approximately $18 million and $2 million, respectively, related to the transfer of receivables to assets held for sale. |
(2) | NACF charge-offs for 2014 and 2013 included approximately $18 million and $5 million, respectively, related to the transfer of receivables to assets held for sale. |
(3) | NSP charge-offs for 2014 and 2013 included approximately $7 million and $32 million, respectively, related to the transfer of receivables to assets held for sale. |
2014 | 2013 | 2012 | 2011 | 2010 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Non-accrual loans | ||||||||||||||||||||||
U.S. | $ | 71.9 | $ | 176.3 | $ | 273.1 | $ | 623.6 | $ | 1,336.5 | ||||||||||||
Foreign | 88.6 | 64.4 | 57.0 | 77.8 | 280.7 | |||||||||||||||||
Non-accrual loans | 160.5 | 240.7 | 330.1 | 701.4 | 1,617.2 | |||||||||||||||||
Troubled Debt Restructurings | ||||||||||||||||||||||
U.S. | $ | 13.8 | $ | 218.0 | $ | 263.2 | $ | 427.5 | $ | 412.4 | ||||||||||||
Foreign | 3.4 | 2.9 | 25.9 | 17.7 | 49.3 | |||||||||||||||||
Restructured loans | $ | 17.2 | $ | 220.9 | $ | 289.1 | $ | 445.2 | $ | 461.7 | ||||||||||||
Accruing loans past due 90 days or more | $ | 10.3 | $ | 9.9 | $ | 3.4 | $ | 2.2 | $ | 1.7 |
2014 | 2013 | 2012 | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Transportation Finance | $ | 0.1 | – | $ | 14.3 | 0.81 | % | $ | 31.5 | 2.36 | % | ||||||||||||||||
International Finance | 37.1 | 5.93 | % | 21.0 | 1.21 | % | 7.5 | 0.61 | % | ||||||||||||||||||
Transportation & International Finance | 37.2 | 1.05 | % | 35.3 | 1.01 | % | 39.0 | 1.52 | % | ||||||||||||||||||
Corporate Finance | 30.9 | 0.45 | % | 83.8 | 1.23 | % | 156.5 | 2.41 | % | ||||||||||||||||||
Equipment Finance | 70.0 | 1.48 | % | 59.4 | 1.47 | % | 55.3 | 1.51 | % | ||||||||||||||||||
Commercial Services | – | – | 4.2 | 0.19 | % | 6.0 | 0.26 | % | |||||||||||||||||||
North American Commercial Finance | 100.9 | 0.63 | % | 147.4 | 1.00 | % | 217.8 | 1.66 | % | ||||||||||||||||||
Non-Strategic Portfolio | 22.4 | NM | 58.0 | 13.14 | % | 73.3 | 4.85 | % | |||||||||||||||||||
Total | $ | 160.5 | 0.82 | % | $ | 240.7 | 1.29 | % | $ | 330.1 | 1.92 | % |
Years Ended December 31 | |||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||
U.S. | Foreign | Total | U.S. | Foreign | Total | U.S. | Foreign | Total | |||||||||||||||||||||||||||||||
Interest revenue that would have been earned at original terms | $ | 22.8 | $ | 12.4 | $ | 35.2 | $ | 52.9 | $ | 12.4 | $ | 65.3 | $ | 66.5 | $ | 12.1 | $ | 78.6 | |||||||||||||||||||||
Less: Interest recorded | 6.7 | 4.2 | 10.9 | 18.4 | 4.2 | 22.6 | 23.7 | 3.7 | 27.4 | ||||||||||||||||||||||||||||||
Foregone interest revenue | $ | 16.1 | $ | 8.2 | $ | 24.3 | $ | 34.5 | $ | 8.2 | $ | 42.7 | $ | 42.8 | $ | 8.4 | $ | 51.2 |
2014 | 2013 | 2012 | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
% Compliant | % Compliant | % Compliant | |||||||||||||||||||||||||
Troubled Debt Restructurings | |||||||||||||||||||||||||||
Deferral of principal and/or interest | $ | 6.0 | 96 | % | $ | 194.6 | 99 | % | $ | 248.5 | 98 | % | |||||||||||||||
Debt forgiveness | – | – | 2.4 | 77 | % | 2.5 | 95 | % | |||||||||||||||||||
Interest rate reductions | – | – | – | – | 14.8 | 100 | % | ||||||||||||||||||||
Covenant relief and other | 11.2 | 83 | % | 23.9 | 74 | % | 23.3 | 80 | % | ||||||||||||||||||
Total TDRs | $ | 17.2 | 88 | % | $ | 220.9 | 96 | % | $ | 289.1 | 97 | % | |||||||||||||||
Percent non accrual | 75 | % | 33 | % | 29 | % | |||||||||||||||||||||
Modifications(1) | |||||||||||||||||||||||||||
Extended maturity | $ | 0.1 | 100 | % | $ | 14.9 | 37 | % | $ | 111.5 | 97 | % | |||||||||||||||
Covenant relief | 70.9 | 100 | % | 50.6 | 100 | % | 113.6 | 100 | % | ||||||||||||||||||
Interest rate increase | 25.1 | 100 | % | 21.8 | 100 | % | 79.6 | 100 | % | ||||||||||||||||||
Other | 58.3 | 100 | % | 62.6 | 87 | % | 62.4 | 100 | % | ||||||||||||||||||
Total Modifications | $ | 154.4 | 100 | % | $ | 149.9 | 89 | % | $ | 367.1 | 99 | % | |||||||||||||||
Percent non-accrual | 10 | % | 23 | % | 25 | % |
(1) | Table depicts the predominant element of each modification, which may contain several of the characteristics listed. |
NON-INTEREST INCOME
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Rental income on operating leases | $ | 2,093.0 | $ | 1,897.4 | $ | 1,900.8 | |||||||||
Other Income: | |||||||||||||||
Factoring commissions | 120.2 | 122.3 | 126.5 | ||||||||||||
Gains on sales of leasing equipment | 98.4 | 130.5 | 117.6 | ||||||||||||
Fee revenues | 93.1 | 101.5 | 86.1 | ||||||||||||
Gain on investments | 39.0 | 8.2 | 40.2 | ||||||||||||
Gains on loan and portfolio sales | 34.3 | 48.8 | 162.3 | ||||||||||||
Recoveries of loans charged off pre-emergence and loans charged off prior to transfer to held for sale | 19.8 | 21.9 | 54.3 | ||||||||||||
Counterparty receivable accretion | 10.7 | 8.6 | 88.7 | ||||||||||||
Gains (losses) on derivatives and foreign currency exchange | (37.8 | ) | 1.0 | (5.7 | ) | ||||||||||
Impairment on assets held for sale | (100.7 | ) | (124.0 | ) | (115.1 | ) | |||||||||
Other revenues | 28.4 | 62.5 | 59.8 | ||||||||||||
Other income | 305.4 | 381.3 | 614.7 | ||||||||||||
Non-interest income | $ | 2,398.4 | $ | 2,278.7 | $ | 2,515.5 |
EXPENSES
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Depreciation on operating lease equipment | $ | 615.7 | $ | 540.6 | $ | 513.2 | |||||||||
Maintenance and other operating lease expenses | 196.8 | 163.1 | 139.4 | ||||||||||||
Operating expenses: | |||||||||||||||
Compensation and benefits | 533.8 | 535.4 | 537.1 | ||||||||||||
Technology | 85.2 | 83.3 | 81.6 | ||||||||||||
Professional fees | 80.6 | 69.1 | 63.8 | ||||||||||||
Net occupancy expense | 35.0 | 35.3 | 36.1 | ||||||||||||
Advertising and marketing | 33.7 | 25.2 | 36.5 | ||||||||||||
Provision for severance and facilities exiting activities | 31.4 | 36.9 | 22.7 | ||||||||||||
Other expenses(1) | 142.1 | 185.0 | 116.2 | ||||||||||||
Operating expenses | 941.8 | 970.2 | 894.0 | ||||||||||||
Loss on debt extinguishments | 3.5 | – | 61.2 | ||||||||||||
Total other expenses | $ | 1,757.8 | $ | 1,673.9 | $ | 1,607.8 | |||||||||
Headcount | 3,360 | 3,240 | 3,560 |
(1) | The year ended December 31, 2013 included $50 million related to the Tyco tax agreement settlement charge. |
- | Compensation and benefits decreased in 2014 as progress on various expense initiatives was partly offset by increased costs related to the acquisitions. Expenses were down slightly in 2013 from 2012 as lower salaries and benefit costs from the reduction in employees was partially offset by higher incentive compensation, which includes the amortization of deferred compensation. Headcount at December 31, 2014 was up from a year ago, driven by the Direct Capital and Nacco acquisitions, while down from 2012, resulting from efficiency initiatives. SeeNote 20 — Retirement, Postretirement and Other Benefit Plans inItem 8 Financial Statements and Supplementary Data. |
- | Professional fees include legal and other professional fees such as tax, audit, and consulting services and increased from 2013 reflecting costs associated with acquisitions, the pending OneWest Transaction, and exits of our non-strategic portfolios. The increase from 2012 to 2013 primarily reflected costs associated with our international rationalization efforts, and 2012 also benefited from higher amounts received on favorable legal and tax resolutions. |
- | Advertising and marketing expenses include costs associated with raising deposits. Bank advertising and marketing costs increased in 2014 from 2013, reflecting increased deposits and |
the termination of a branch under construction. Advertising and marketing costs totaled $25 million in 2014, $15 million in 2013, and $24 million in 2012. |
- | Provision for severance and facilities exiting activities reflects costs associated with various organization efficiency initiatives. Severance costs were $30 million of the 2014 charges and related to the termination of approximately 150 employees and the associated benefits costs. The facility exiting activities totaled $1 million. SeeNote 27 — Severance and Facility Exiting Liabilities for additional information. |
- | Other expenses include items such as travel and entertainment, insurance, FDIC costs, office equipment and supplies costs and taxes other than income taxes. Other expenses declined in 2014 primarily due to the 2013 $50 million Tyco tax agreement settlement charge expense. On December 20, 2013, we reached an agreement with Tyco to settle contract claims asserted by Tyco related to a tax agreement that CIT and Tyco entered into in 2002 in connection with CIT’s separation from Tyco. CIT agreed to pay Tyco $60 million, including $10 million that had been previously accrued. In 2014, other expenses also include increased Bank deposit insurance costs. |
FRESH START ACCOUNTING
INCOME TAXES
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Provision for income taxes, before discrete items | $ | 47.4 | $ | 54.4 | $ | 76.2 | |||||||||
Discrete items | (445.3 | ) | 29.5 | 40.5 | |||||||||||
(Benefit) provision for income taxes | $ | (397.9 | ) | $ | 83.9 | $ | 116.7 | ||||||||
Effective tax rate | (58.4 | )% | 11.4 | % | (28.1 | )% |
- | $375 million reduction to the valuation allowance on the U.S. net federal deferred tax assets, |
- | $44 million reduction to the valuation allowances on certain international net deferred tax assets, |
- | $30 million reduction to the U.S. federal and state valuation allowances consequent to the acquisition of Direct Capital, and |
- | Miscellaneous other $4 million of net tax expense items partially offset the above mentioned tax benefits. |
RESULTS BY BUSINESS SEGMENT
Year Ended December 31, 2014 | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Transportation & International Finance | North American Commercial Finance | Non-Strategic Portfolios | Corporate & Other | Total | ||||||||||||||||||
Income (loss) from continuing operations, before (provision) benefit for income taxes | $ | 612.2 | $ | 319.0 | $ | (102.1 | ) | $ | (148.3 | ) | $ | 680.8 | ||||||||||
Accelerated FSA net discount on debt extinguishments and repurchases | 34.7 | – | – | – | 34.7 | |||||||||||||||||
Debt related – loss on debt extinguishments | – | – | – | 3.5 | 3.5 | |||||||||||||||||
Accelerated OID on debt extinguishments related to the GSI facility | (42.0 | ) | – | – | – | (42.0 | ) | |||||||||||||||
Pre-tax income (loss) from continuing operations – excluding debt redemptions and OID acceleration | $ | 604.9 | $ | 319.0 | $ | (102.1 | ) | $ | (144.8 | ) | $ | 677.0 | ||||||||||
Year Ended December 31, 2013 | ||||||||||||||||||||||
Income (loss) from continuing operations, before (provision) benefit for income taxes | $ | 563.7 | $ | 364.7 | $ | (62.8 | ) | $ | (131.4 | ) | $ | 734.2 | ||||||||||
Accelerated FSA net discount on debt extinguishments and repurchases | 14.5 | 8.5 | 10.6 | 1.0 | 34.6 | |||||||||||||||||
Accelerated OID on debt extinguishments related to the GSI facility | – | – | (5.2 | ) | – | (5.2 | ) | |||||||||||||||
Pre-tax income (loss) from continuing operations – excluding debt redemptions and OID acceleration | $ | 578.2 | $ | 373.2 | $ | (57.4 | ) | $ | (130.4 | ) | $ | 763.6 | ||||||||||
Year Ended December 31, 2012 | ||||||||||||||||||||||
Income (loss) from continuing operations, before (provision) benefit for income taxes | $ | (166.2 | ) | $ | 267.3 | $ | (125.0 | ) | $ | (391.5 | ) | $ | (415.4 | ) | ||||||||
Accelerated FSA net discount on debt extinguishments and repurchases | 638.5 | 435.9 | 39.5 | 181.0 | 1,294.9 | |||||||||||||||||
Debt related – loss on debt extinguishments | – | – | – | 61.2 | 61.2 | |||||||||||||||||
Accelerated OID on debt extinguishments related to the GSI facility | (6.9 | ) | – | – | – | (6.9 | ) | |||||||||||||||
Pre-tax income (loss) from continuing operations – excluding debt redemptions and OID acceleration | $ | 465.4 | $ | 703.2 | $ | (85.5 | ) | $ | (149.3 | ) | $ | 933.8 |
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Earnings Summary | |||||||||||||||
Interest income | $ | 289.4 | $ | 254.9 | $ | 218.2 | |||||||||
Interest expense | (650.4 | ) | (585.5 | ) | (1,331.5 | ) | |||||||||
Provision for credit losses | (38.3 | ) | (18.7 | ) | (14.5 | ) | |||||||||
Rental income on operating leases | 1,959.9 | 1,682.4 | 1,666.3 | ||||||||||||
Other income | 69.9 | 82.2 | 65.8 | ||||||||||||
Depreciation on operating lease equipment | (519.6 | ) | (433.3 | ) | (410.9 | ) | |||||||||
Maintenance and other operating lease expenses | (196.8 | ) | (163.0 | ) | (139.3 | ) | |||||||||
Operating expenses | (301.9 | ) | (255.3 | ) | (220.3 | ) | |||||||||
Income (loss) before (provision) benefit for income taxes | $ | 612.2 | $ | 563.7 | $ | (166.2 | ) | ||||||||
Pre-tax income – excluding debt redemption charges and accelerated OID on debt extinguishment related to the GSI facility(1) | $ | 604.9 | $ | 578.2 | $ | 465.4 | |||||||||
Select Average Balances | |||||||||||||||
Average finance receivables (AFR) | $ | 3,571.2 | $ | 3,078.9 | $ | 2,204.9 | |||||||||
Average operating leases (AOL) | 14,255.7 | 12,195.8 | 11,853.5 | ||||||||||||
Average earning assets (AEA) | 18,243.0 | 15,434.6 | 14,269.2 | ||||||||||||
Statistical Data | |||||||||||||||
Net finance revenue (interest and rental income, net of interest and depreciation expense and maintenance and other operating lease expenses) (NFR) | $ | 882.5 | $ | 755.5 | $ | 2.8 | |||||||||
Net finance margin (NFR as a % of AEA) | 4.84 | % | 4.89 | % | 0.02 | % | |||||||||
Operating lease margin as a % of AOL | 8.72 | % | 8.91 | % | 9.42 | % | |||||||||
Pretax return on AEA | 3.36 | % | 3.65 | % | (1.16 | )% | |||||||||
New business volume | $ | 5,015.0 | $ | 3,578.0 | $ | 2,825.7 |
(1) | Non-GAAP measurement, see table at the beginning of this section for a reconciliation of non-GAAP to GAAP financial information. |
- | NFR was up from 2013 and 2012. Excluding accelerated debt FSA and OID accretion, which had a significant impact in 2012, NFR was $875 million, up from $770 million in 2013 and $634 million in 2012. The increases reflect growth in the portfolios and lower funding costs. Total net FSA accretion increased NFR by $152 million in 2014 and $176 million in 2013 and decreased NFR by $550 million in 2012. The remaining net FSA accretion benefits will primarily be reflected in depreciation expense, and will continue to decline over time. Adjusted Net Finance Margin decreased from 2013 reflecting the lower portfolio yield and increased from 2012 reflecting improved funding costs. SeeSelect Segment and Division Margin Metrics table inNet Finance Revenue section. |
- | Financing and leasing assets grew 16% in 2014, primarily reflecting new business volume of $5.0 billion and the Nacco rail acquisition, partially offset by asset sales, including a UK portfolio and aircraft sold to the TC-CIT Aviation joint venture, equipment depreciation and loan amortization. |
- | Gross yields (interest income plus rental income on operating leases as a % of AEA) decreased from 2013 and 2012, reflecting lower rental rates on certain aircraft and growth in the loan portfolio. |
- | Net operating lease revenue (rental income on operating leases less depreciation on operating lease equipment and maintenance and other operating lease expenses), which is a component of NFR, increased as higher rental income from growth in the Aerospace and Rail portfolios and strong utilization offset increased depreciation and maintenance and operating lease expense. The decline from 2013 compared to 2012 reflected pressure on renewal rates on certain aircraft, higher depreciation and higher maintenance and operating lease expense. The decline in the operating lease margin (as a % of average operating lease equipment) primarily reflects pressure on renewal rates on certain aircraft. |
- | New business volume for 2014 primarily included the delivery of 37 aircraft, approximately 6,000 railcars, with the vast majority of the rail operating lease volume originated by the Bank, and $2.2 billion of finance receivables. New business volume for 2013 primarily reflected the delivery of 24 aircraft and approximately 5,400 railcars, while new business volume for 2012 reflected the addition of 21 aircraft and approximately 7,000 railcars. |
- | Equipment utilization remained strong throughout 2014 and ended the year with 99% of commercial air and rail equipment on lease or under a commitment. Rail utilization rates were up from 2013 and 2012, while air utilization remained consistently strong over the 3-year period. We have 16 new aircraft deliveries scheduled for 2015, substantially all of which have lease commitments with customers. Over 80% of all railcars on order have commitments, including about 90% of the approximately 7,000 scheduled railcar deliveries for 2015. |
- | Other income primarily reflected the following: |
- | Gains on asset sales totaled $78 million on $1.3 billion of equipment and receivable sales, including a gain of $30 million on the sale of aircraft to the TC-CIT Aviation joint ventures, compared to $82 million of gains on $978 million of asset sales in 2012 and $70 million of gains on $750 million of asset sales in 2012. |
- | Impairment charges on AHFS totaled $31 million in 2014, and predominantly related to international portfolios and commercial aircraft, compared to $19 million in 2013 and $34 million in 2012, mostly related to commercial aircraft. |
- | FSA accretion on counterparty receivable totaled $2 million, $1 million and $15 million for the years ended December 31, 2014, 2013 and 2012, respectively. There is no longer any balance to accrete. |
- | Other income also includes a small amount of fee and periodic items, such as a $13 million benefit related to a work-out related claim in 2013. |
- | Non-accrual loans were $37 million (1.05% of finance receivables) at December 31, 2014, compared to $35 million (1.01%) at December 31, 2013 and $39 million (1.52%) at December 31, 2012. The 2014 and 2013 provision for credit losses mostly reflected the credit metric trends and loan portfolio growth. Net charge-offs were $38 million (1.06% of average finance receivables) in 2014, up from $17 million (0.55%) and $7 million (0.32%) in 2013 and 2012, respectively. Essentially all of the charge-offs for 2014, 2013 and 2012 were concentrated in the International portfolio. TIF charge-offs in 2014 included approximately $18 million related to the transfer of receivables to assets held for sale (amounts for the prior years were not significant). |
- | Operating expenses increased in 2014 and 2013 reflecting investments in new initiatives and growth in existing businesses, including the Nacco rail acquisition in the 2014 first quarter. |
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Earnings Summary | |||||||||||||||
Interest income | $ | 832.4 | $ | 828.6 | $ | 976.5 | |||||||||
Interest expense | (285.4 | ) | (284.3 | ) | (750.9 | ) | |||||||||
Provision for credit losses | (62.0 | ) | (35.5 | ) | (44.0 | ) | |||||||||
Rental income on operating leases | 97.4 | 104.0 | 99.4 | ||||||||||||
Other income | 318.0 | 306.5 | 555.2 | ||||||||||||
Depreciation on operating lease equipment | (81.7 | ) | (75.1 | ) | (71.9 | ) | |||||||||
Operating expenses | (499.7 | ) | (479.5 | ) | (497.0 | ) | |||||||||
Income before provision for income taxes | $ | 319.0 | $ | 364.7 | $ | 267.3 | |||||||||
Pre-tax income – excluding debt redemption charges(1) | $ | 319.0 | $ | 373.2 | $ | 703.2 | |||||||||
Select Average Balances | |||||||||||||||
Average finance receivables (AFR) | $ | 15,397.7 | $ | 14,040.4 | $ | 12,420.8 | |||||||||
Average earning assets (AEA)(2) | 14,319.5 | 12,916.2 | 11,362.7 | ||||||||||||
Statistical Data | |||||||||||||||
Net finance revenue (interest and rental income, net of interest and depreciation expense) (NFR) | $ | 562.7 | $ | 573.2 | $ | 253.1 | |||||||||
Net finance margin (NFR as a % of AEA) | 3.93 | % | 4.44 | % | 2.23 | % | |||||||||
Pretax return on AEA | 2.23 | % | 2.82 | % | 2.35 | % | |||||||||
New business volume | $ | 6,201.6 | $ | 6,244.9 | $ | 5,862.9 | |||||||||
Factoring volume | $ | 26,702.5 | $ | 25,712.2 | $ | 25,123.9 |
(1) | Non-GAAP measurement, see table at the beginning of this section for a reconciliation of non-GAAP to GAAP financial information. |
(2) | AEA is lower than AFR as it is reduced by the average credit balances for factoring clients. |
- | NFR was down slightly from 2013 and up from 2012. Because of the significant impact accelerated debt repayments had on prior periods, it is more meaningful to exclude the accelerated accretion. Excluding accelerated debt FSA, NFR of $563 million was down from $582 million in 2013 and $689 million in 2012. NFR, excluding accelerated debt FSA accretion, benefited from a higher level of earning assets and lower funding costs in 2014 and 2013, which were offset by a declining benefit from net FSA accretion and lower yields on certain loan products. Net FSA accretion, excluding the accelerated debt accretion, increased NFR by $20 million in 2014, $44 million in 2013 and $254 million in 2012. |
- | NACF gross yields and NFM reflect continued pressures on yields in certain units of the business. SeeSelect Segment and Division Margin Metrics table inNet Finance Revenue section. |
- | Financing and leasing assets totaled $16.2 billion, up from $15.0 billion at December 31, 2013 and $13.3 billion at December 31, 2012, driven primarily by new business volume and the Direct Capital acquisition. |
- | Other income was up slightly from 2013 and down from 2012, reflecting the following: |
- | Factoring commissions of $120 million were down slightly from both prior years as pressure on factoring commission rates due to competition and changes in the portfolio mix offset increased factoring volume. |
- | Gains on asset sales (including receivables, equipment and investments) totaled $89 million in 2014, up from $47 million in 2013 but down from $227 million in 2012. Financing and Leasing assets sold totaled $803 million in 2014, compared to $439 million in 2013 and $948 million in 2012. |
- | FSA-related counterparty receivable accretion totaled $8 million, compared to $7 million in 2013 and $68 million in 2012. There is no longer any balance to accrete. |
- | Recoveries of loans charged off pre-emergence and loans charged off prior to transfer to assets held for sale totaled $13 million in 2014, unchanged from 2013 and down from $45 million in 2012. |
- | Fee revenue was $81 million in 2014, compared to $82 million in 2013 and $67 million in 2012. Fee revenue is mainly driven by syndication fees, arranger fees, agent fees and fees from issuing letters of credit and on unused lines of credit. |
- | 2013 also included gains on workout-related claims of $19 million. |
- | Credit metrics remained at or near cycle lows. Non-accrual loans declined to $101 million (0.63% of finance receivables), from $147 million (1.00%) at December 31, 2013 and $218 million (1.66%) at December 31, 2012. Net charge-offs were $56 million (0.36% of average finance receivables) in 2014, compared to $19 million (0.13%) in 2013 and $52 million (0.42%) in 2012. Net charge-offs for 2014 included $18 million related to the transfer of receivables to AHFS compared to $5 million in 2013. |
- | Operating expenses largely reflected the benefits of operating efficiencies gained compared to 2013 and 2012, offset by the additional costs related to the acquisition of Direct Capital. |
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Earnings Summary | |||||||||||||||
Interest income | $ | 90.5 | $ | 157.2 | $ | 180.3 | |||||||||
Interest expense | (82.1 | ) | (130.2 | ) | (262.4 | ) | |||||||||
Provision for credit losses | 0.4 | (10.8 | ) | 7.3 | |||||||||||
Rental income on operating leases | 35.7 | 111.0 | 135.1 | ||||||||||||
Other income | (57.6 | ) | (14.6 | ) | (9.1 | ) | |||||||||
Depreciation on operating lease equipment | (14.4 | ) | (32.2 | ) | (30.4 | ) | |||||||||
Maintenance and other operating lease expenses | – | (0.1 | ) | (0.1 | ) | ||||||||||
Operating expenses | (74.6 | ) | (143.1 | ) | (145.7 | ) | |||||||||
Loss before provision for income taxes | $ | (102.1 | ) | $ | (62.8 | ) | $ | (125.0 | ) | ||||||
Pre-tax loss – excluding debt redemption charges and accelerated OID on debt extinguishment related to the GSI facility(1) | $ | (102.1 | ) | $ | (57.4 | ) | $ | (85.5 | ) | ||||||
Select Average Balances | |||||||||||||||
Average finance receivables (AFR) | $ | 151.2 | $ | 1,128.6 | $ | 1,490.7 | |||||||||
Average earning assets (AEA) | 832.2 | 1,771.7 | 1,976.7 | ||||||||||||
Statistical Data | |||||||||||||||
Net finance revenue (interest and rental income, net of interest and depreciation expense and maintenance and other operating lease expenses) (NFR) | $ | 29.7 | $ | 105.7 | $ | 22.5 | |||||||||
Net finance margin (NFR as a % of AEA) | 3.57 | % | 5.97 | % | 1.14 | % | |||||||||
New business volume | $ | 216.5 | $ | 713.0 | $ | 911.6 |
(1) | Non-GAAP measurement, see table at the beginning of this section for a reconciliation of non-GAAP to GAAP financial information. |
- | Net finance revenue (“NFR”) was down from 2013, driven by lower earning assets. There was minimal net FSA accretion in 2014, while NFR included total net FSA accretion costs of $20 million in 2013 and $122 million in 2012. |
- | Other income declined from the prior years, reflecting: |
- | A gain of $1 million on $483 million of receivable and equipment sales in 2014, which included approximately $340 million of assets related to the SBL portfolio. Gains totaled $57 million on $656 million of receivable and equipment sales in 2013, which included approximately $470 million of assets related to the Dell Europe portfolio sale. Gains totaled $22 million on $43 million of equipment and receivable sales in 2012. The 2013 gain included $50 million on the sale of the Dell Europe portfolio, whereas the 2012 gain included $14 million related to the sale of our Dell Europe operating platform. |
- | Impairment charges recorded on international equipment finance portfolios and operating lease equipment held for sale. Total impairment charges were $70 million for 2014, compared to $105 million and $81 million for the 2013 and 2012, respectively. The 2014 impairment charges related mostly to fair value adjustments to portfolios in AHFS as part of our international rationalization. The majority of the 2013 and 2012 impairments related to charges on operating leases recorded in assets held for sale ($62 million in 2013 and $80 million in 2012), which had a nearly offsetting benefit in net finance revenue related to suspended depreciation, and for portfolios transferred to AHFS as part of our international rationalization. See“Non-interest Income” and |
- | The remaining balance mostly includes fee revenue, recoveries of loans charged off pre-emergence and loans charged off prior to transfer to held for sale and other revenues. Fee revenue included servicing fees related to the small business lending portfolio, which totaled $5 million in 2014 and $11 million for each of 2013 and 2012, which were no longer earned subsequent to the sale of that portfolio in 2014. |
- | Operating expenses were down, primarily reflecting lower cost due to the sales in 2014 and 2013, including SBL, Dell Europe operations and other international operations. As we complete the exits in Mexico and Brazil and the closing of several legal entities in Europe and Asia we expect to eliminate approximately $15 million from our quarterly expenses. |
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Earnings Summary | |||||||||||||||
Interest income | $ | 14.2 | $ | 14.5 | $ | 19.0 | |||||||||
Interest expense | (68.3 | ) | (60.9 | ) | (320.9 | ) | |||||||||
Provision for credit losses | (0.2 | ) | 0.1 | (0.2 | ) | ||||||||||
Other income | (24.9 | ) | 7.2 | 2.8 | |||||||||||
Operating expenses | (65.6 | ) | (92.3 | ) | (31.0 | ) | |||||||||
Loss on debt extinguishments | (3.5 | ) | – | (61.2 | ) | ||||||||||
Loss before provision for income taxes | $ | (148.3 | ) | $ | (131.4 | ) | $ | (391.5 | ) | ||||||
Pre-tax loss – excluding debt redemption charges and accelerated OID on debt extinguishment related to the GSI facility(1) | $ | (144.8 | ) | $ | (130.4 | ) | $ | (149.3 | ) |
(1) | Non-GAAP measurement, see table at the beginning of this section for a reconciliation of non-GAAP to GAAP financial information. |
- | Interest income consists of interest and dividend income primarily from deposits held at other depository institutions and other investment securities. |
- | Interest expense is allocated to the segments. Amounts in excess of these allocations and amounts related to excess liquidity are held in Corporate. Interest expense also reflects certain FSA amounts, $17 million in 2014, while 2013 and 2012 included $8 million and $196 million, respectively. |
- | Other income primarily reflects gains and (losses) on derivatives, including the GSI facilities, which drove the balances in 2014, and foreign currency exchange. The GSI derivative had a negative mark-to-market of $15 million in 2014. |
- | Operating expenses reflects salary and general and administrative expenses in excess of amounts allocated to the business segments and litigation-related costs, including $50 million in 2013 related to the Tyco tax agreement settlement. Operating expenses also included $31 million, $37 million and $23 million related to provision for severance and facilities exiting activities during 2014, 2013 and 2012, respectively. |
- | The 2012 loss on debt extinguishments resulted primarily from repayments of Series C Notes. |
FINANCING AND LEASING ASSETS
December 31, | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | $ Change 2014 vs 2013 | $ Change 2013 vs 2012 | ||||||||||||||||||
Transportation & International Finance | ||||||||||||||||||||||
Loans | $ | 3,558.9 | $ | 3,494.4 | $ | 2,556.5 | $ | 64.5 | $ | 937.9 | ||||||||||||
Operating lease equipment, net | 14,665.2 | 12,778.5 | 12,178.0 | 1,886.7 | 600.5 | |||||||||||||||||
Assets held for sale | 815.2 | 158.5 | 173.6 | 656.7 | (15.1 | ) | ||||||||||||||||
Financing and leasing assets | 19,039.3 | 16,431.4 | 14,908.1 | 2,607.9 | 1,523.3 | |||||||||||||||||
Aerospace | ||||||||||||||||||||||
Loans | 1,796.5 | 1,247.7 | 1,217.6 | 548.8 | 30.1 | |||||||||||||||||
Operating lease equipment, net | 8,949.5 | 8,267.9 | 8,105.2 | 681.6 | 162.7 | |||||||||||||||||
Assets held for sale | 391.6 | 148.8 | 171.8 | 242.8 | (23.0 | ) | ||||||||||||||||
Financing and leasing assets | 11,137.6 | 9,664.4 | 9,494.6 | 1,473.2 | 169.8 | |||||||||||||||||
Rail | ||||||||||||||||||||||
Loans | 130.0 | 107.2 | 117.0 | 22.8 | (9.8 | ) | ||||||||||||||||
Operating lease equipment, net | 5,715.2 | 4,503.9 | 4,060.7 | 1,211.3 | 443.2 | |||||||||||||||||
Assets held for sale | 1.2 | 3.3 | 1.8 | (2.1 | ) | 1.5 | ||||||||||||||||
Financing and leasing assets | 5,846.4 | 4,614.4 | 4,179.5 | 1,232.0 | 434.9 | |||||||||||||||||
Maritime Finance | ||||||||||||||||||||||
Loans | 1,006.7 | 412.6 | – | 594.1 | 412.6 | |||||||||||||||||
Assets held for sale | 19.7 | – | – | 19.7 | – | |||||||||||||||||
Financing and leasing assets | 1,026.4 | 412.6 | – | 613.8 | 412.6 | |||||||||||||||||
International Finance | ||||||||||||||||||||||
Loans | 625.7 | 1,726.9 | 1,221.9 | (1,101.2 | ) | 505.0 | ||||||||||||||||
Operating lease equipment, net | 0.5 | 6.7 | 12.1 | (6.2 | ) | (5.4 | ) | |||||||||||||||
Assets held for sale | 402.7 | 6.4 | – | 396.3 | 6.4 | |||||||||||||||||
Financing and leasing assets | 1,028.9 | 1,740.0 | 1,234.0 | (711.1 | ) | 506.0 | ||||||||||||||||
North American Commercial Finance | ||||||||||||||||||||||
Loans | 15,936.0 | 14,693.1 | 13,084.4 | 1,242.9 | 1,608.7 | |||||||||||||||||
Operating lease equipment, net | 265.2 | 240.5 | 150.9 | 24.7 | 89.6 | |||||||||||||||||
Assets held for sale | 22.8 | 38.2 | 42.1 | (15.4 | ) | (3.9 | ) | |||||||||||||||
Financing and leasing assets | 16,224.0 | 14,971.8 | 13,277.4 | 1,252.2 | 1,694.4 | |||||||||||||||||
Corporate Finance | ||||||||||||||||||||||
Loans | 6,889.9 | 6,831.8 | 6,501.0 | 58.1 | 330.8 | |||||||||||||||||
Operating lease equipment, net | – | 6.2 | 16.2 | (6.2 | ) | (10.0 | ) | |||||||||||||||
Assets held for sale | 22.8 | 38.2 | 34.1 | (15.4 | ) | 4.1 | ||||||||||||||||
Financing and leasing assets | 6,912.7 | 6,876.2 | 6,551.3 | 36.5 | 324.9 | |||||||||||||||||
Equipment Finance | ||||||||||||||||||||||
Loans | 4,717.3 | 4,044.1 | 3,662.0 | 673.2 | 382.1 | |||||||||||||||||
Operating lease equipment, net | 265.2 | 234.3 | 134.7 | 30.9 | 99.6 | |||||||||||||||||
Assets held for sale | – | – | 8.0 | – | (8.0 | ) | ||||||||||||||||
Financing and leasing assets | 4,982.5 | 4,278.4 | 3,804.7 | 704.1 | 473.7 | |||||||||||||||||
Real Estate Finance | ||||||||||||||||||||||
Loans | 1,768.6 | 1,554.8 | 616.1 | 213.8 | 938.7 | |||||||||||||||||
Commercial Services | ||||||||||||||||||||||
Loans and factoring receivables | 2,560.2 | 2,262.4 | 2,305.3 | 297.8 | (42.9 | ) | ||||||||||||||||
Non-Strategic Portfolios | ||||||||||||||||||||||
Loans | 0.1 | 441.7 | 1,512.2 | (441.6 | ) | (1,070.5 | ) | |||||||||||||||
Operating lease equipment, net | – | 16.4 | 82.8 | (16.4 | ) | (66.4 | ) | |||||||||||||||
Assets held for sale | 380.1 | 806.7 | 429.1 | (426.6 | ) | 377.6 | ||||||||||||||||
Financing and leasing assets | 380.2 | 1,264.8 | 2,024.1 | (884.6 | ) | (759.3 | ) | |||||||||||||||
Total financing and leasing assets | $ | 35,643.5 | $ | 32,668.0 | $ | 30,209.6 | $ | 2,975.5 | $ | 2,458.4 |
U.S. | Foreign | Total | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Fixed-rate | ||||||||||||||
1 year or less | $ | 3,662.2 | $ | 674.7 | $ | 4,336.9 | ||||||||
Year 2 | 1,119.7 | 380.0 | 1,499.7 | |||||||||||
Year 3 | 793.3 | 251.0 | 1,044.3 | |||||||||||
Year 4 | 458.0 | 151.8 | 609.8 | |||||||||||
Year 5 | 229.8 | 100.9 | 330.7 | |||||||||||
2-5 years | 2,600.8 | 883.7 | 3,484.5 | |||||||||||
After 5 years | 440.7 | 205.7 | 646.4 | |||||||||||
Total fixed-rate | 6,703.7 | 1,764.1 | 8,467.8 | |||||||||||
Adjustable-rate | ||||||||||||||
1 year or less | 536.6 | 270.0 | 806.6 | |||||||||||
Year 2 | 1,332.9 | 272.1 | 1,605.0 | |||||||||||
Year 3 | 1,497.8 | 313.7 | 1,811.5 | |||||||||||
Year 4 | 1,892.4 | 394.9 | 2,287.3 | |||||||||||
Year 5 | 1,327.6 | 539.1 | 1,866.7 | |||||||||||
2-5 years | 6,050.7 | 1,519.8 | 7,570.5 | |||||||||||
After 5 years | 2,179.7 | 470.4 | 2,650.1 | |||||||||||
Total adjustable-rate | 8,767.0 | 2,260.2 | 11,027.2 | |||||||||||
Total | $ | 15,470.7 | $ | 4,024.3 | $ | 19,495.0 |
Transportation & International Finance | North American Commercial Finance | Non-Strategic Portfolios | Total | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at December 31, 2011 | $ | 13,702.8 | $ | 12,250.7 | $ | 1,959.4 | $ | 27,912.9 | ||||||||||
New business volume | 2,825.7 | 5,862.9 | 911.6 | 9,600.2 | ||||||||||||||
Portfolio / business purchases | 198.0 | – | – | 198.0 | ||||||||||||||
Loan and portfolio sales | – | (448.7 | ) | (10.0 | ) | (458.7 | ) | |||||||||||
Equipment sales | (750.0 | ) | (499.1 | ) | (33.0 | ) | (1,282.1 | ) | ||||||||||
Depreciation | (410.9 | ) | (71.9 | ) | (30.4 | ) | (513.2 | ) | ||||||||||
Gross charge-offs | (15.7 | ) | (98.9 | ) | (27.1 | ) | (141.7 | ) | ||||||||||
Collections and other | (641.8 | ) | (3,717.6 | ) | (746.4 | ) | (5,105.8 | ) | ||||||||||
Balance at December 31, 2012 | 14,908.1 | 13,277.4 | 2,024.1 | 30,209.6 | ||||||||||||||
New business volume | 3,578.0 | 6,244.9 | 713.0 | 10,535.9 | ||||||||||||||
Portfolio / business purchases | 154.3 | 720.4 | – | 874.7 | ||||||||||||||
Loan and portfolio sales | (103.2 | ) | (129.4 | ) | (621.0 | ) | (853.6 | ) | ||||||||||
Equipment sales | (874.8 | ) | (309.5 | ) | (34.8 | ) | (1,219.1 | ) | ||||||||||
Depreciation | (433.3 | ) | (75.1 | ) | (32.2 | ) | (540.6 | ) | ||||||||||
Gross charge-offs | (26.0 | ) | (58.3 | ) | (54.3 | ) | (138.6 | ) | ||||||||||
Collections and other | (771.7 | ) | (4,698.6 | ) | (730.0 | ) | (6,200.3 | ) | ||||||||||
Balance at December 31, 2013 | 16,431.4 | 14,971.8 | 1,264.8 | 32,668.0 | ||||||||||||||
New business volume | 5,015.0 | 6,201.6 | 216.5 | 11,433.1 | ||||||||||||||
Portfolio / business purchases | 649.2 | 536.6 | – | 1,185.8 | ||||||||||||||
Loan and portfolio sales | (474.1 | ) | (460.6 | ) | (454.2 | ) | (1,388.9 | ) | ||||||||||
Equipment sales | (780.5 | ) | (342.1 | ) | (28.3 | ) | (1,150.9 | ) | ||||||||||
Depreciation | (519.6 | ) | (81.7 | ) | (14.4 | ) | (615.7 | ) | ||||||||||
Gross charge-offs | (44.8 | ) | (75.2 | ) | (7.5 | ) | (127.5 | ) | ||||||||||
Collections and other | (1,237.3 | ) | (4,526.4 | ) | (596.7 | ) | (6,360.4 | ) | ||||||||||
Balance at December 31, 2014 | $ | 19,039.3 | $ | 16,224.0 | $ | 380.2 | $ | 35,643.5 |
CONCENTRATIONS
December 31, 2014 | December 31, 2013 | December 31, 2012 | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Northeast | $ | 6,552.0 | 18.4 | % | $ | 5,933.1 | 18.2 | % | $ | 4,495.4 | 14.9 | % | |||||||||||||||
Southwest | 3,852.8 | 10.8 | % | 3,606.9 | 11.1 | % | 3,090.8 | 10.2 | % | ||||||||||||||||||
Midwest | 3,821.6 | 10.7 | % | 3,762.5 | 11.5 | % | 3,970.9 | 13.2 | % | ||||||||||||||||||
Southeast | 3,732.9 | 10.5 | % | 2,690.2 | 8.2 | % | 2,612.9 | 8.7 | % | ||||||||||||||||||
West | 3,183.1 | 8.9 | % | 3,238.6 | 9.9 | % | 3,092.9 | 10.2 | % | ||||||||||||||||||
Total U.S. | 21,142.4 | 59.3 | % | 19,231.3 | 58.9 | % | 17,262.9 | 57.2 | % | ||||||||||||||||||
Asia / Pacific | 4,712.8 | �� | 13.2 | % | 4,017.9 | 12.3 | % | 3,790.0 | 12.5 | % | |||||||||||||||||
Europe | 3,192.4 | 9.0 | % | 3,692.4 | 11.3 | % | 3,386.7 | 11.2 | % | ||||||||||||||||||
Canada | 2,520.6 | 7.1 | % | 2,287.0 | 7.0 | % | 2,255.1 | 7.5 | % | ||||||||||||||||||
Latin America | 1,651.7 | 4.6 | % | 1,743.1 | 5.3 | % | 1,934.3 | 6.4 | % | ||||||||||||||||||
All other countries | 2,423.6 | 6.8 | % | 1,696.3 | 5.2 | % | 1,580.6 | 5.2 | % | ||||||||||||||||||
Total | $ | 35,643.5 | 100.0 | % | $ | 32,668.0 | 100.0 | % | $ | 30,209.6 | 100.0 | % |
December 31, 2014 | December 31, 2013 | December 31, 2012 | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
State | |||||||||||||||||||||||||||
Texas | $ | 3,261.4 | 9.1 | % | $ | 3,022.4 | 9.3 | % | $ | 2,466.2 | 8.2 | % | |||||||||||||||
New York | 2,492.3 | 7.0 | % | 2,323.3 | 7.1 | % | 1,836.1 | 6.1 | % | ||||||||||||||||||
All other states | 15,388.7 | 43.2 | % | 13,885.6 | 42.5 | % | 12,960.6 | 42.9 | % | ||||||||||||||||||
Total U.S. | $ | 21,142.4 | 59.3 | % | $ | 19,231.3 | 58.9 | % | $ | 17,262.9 | 57.2 | % | |||||||||||||||
Country | |||||||||||||||||||||||||||
Canada | $ | 2,520.6 | 7.1 | % | $ | 2,287.0 | 7.0 | % | $ | 2,255.1 | 7.5 | % | |||||||||||||||
China | 1,043.7 | 2.9 | % | 969.1 | 2.9 | % | 1,113.5 | 3.7 | % | ||||||||||||||||||
Australia | 1,029.1 | 2.9 | % | 974.4 | 3.0 | % | 1,041.8 | 3.4 | % | ||||||||||||||||||
England | 855.3 | 2.4 | % | 1,166.5 | 3.6 | % | 941.9 | 3.1 | % | ||||||||||||||||||
Mexico | 670.7 | 1.9 | % | 819.9 | 2.5 | % | 940.5 | 3.1 | % | ||||||||||||||||||
Brazil | 579.5 | 1.6 | % | 710.3 | 2.2 | % | 685.6 | 2.3 | % | ||||||||||||||||||
Philippines | 511.3 | 1.4 | % | 255.9 | 0.8 | % | 172.8 | 0.6 | % | ||||||||||||||||||
Indonesia | 424.4 | 1.2 | % | 285.9 | 0.8 | % | 319.9 | 1.0 | % | ||||||||||||||||||
Russia(1) | 400.0 | 1.1 | % | 355.9 | 1.1 | % | 322.9 | 1.1 | % | ||||||||||||||||||
France | 340.6 | 1.0 | % | 294.7 | 0.9 | % | 248.2 | 0.8 | % | ||||||||||||||||||
Spain | 339.4 | 1.0 | % | 450.7 | 1.4 | % | 459.1 | 1.5 | % | ||||||||||||||||||
All other countries | 5,786.5 | 16.2 | % | 4,866.4 | 14.9 | % | 4,445.4 | 14.7 | % | ||||||||||||||||||
Total International | $ | 14,501.1 | 40.7 | % | $ | 13,436.7 | 41.1 | % | $ | 12,946.7 | 42.8 | % |
(1) | Most of the balance represents operating lease equipment. |
2014 | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Country | Banks(**) | Government | Other | Net Local Country Claims | Total Exposure | Exposure as a Percentage of Total Assets | Total Exposure | Exposure as a Percentage of Total Assets | Total Exposure | Exposure as a Percentage of Total Assets | |||||||||||||||||||||||||||||||||
Canada | $ | 76 | $ | – | $ | 173 | $ | 1,148 | $ | 1,397 | 2.92 | % | $ | 1,784.0 | 3.78 | % | $ | 1,285.0 | 2.92 | % | |||||||||||||||||||||||
United Kingdom | 562 | 2 | 269 | 296 | 1,129 | 2.36 | % | 1,317.0 | 2.79 | % | 449.0 | 1.02 | % | ||||||||||||||||||||||||||||||
China | – | – | 126 | 727 | 853 | 1.78 | % | 881.0 | 1.87 | % | 335.0 | 0.76 | % | ||||||||||||||||||||||||||||||
Marshall Islands | – | – | 687 | – | 687 | 1.43 | % | – | – | – | – | ||||||||||||||||||||||||||||||||
France | 3 | – | 412 | 11 | 426 | 0.89 | % | 586.0 | 1.24 | % | 566.0 | 1.29 | % | ||||||||||||||||||||||||||||||
Germany | – | – | – | – | (*) | – | 442.0 | 0.94 | % | (*) | – | ||||||||||||||||||||||||||||||||
Mexico | – | – | – | – | – | – | 406.0 | 0.86 | % | (*) | – | ||||||||||||||||||||||||||||||||
Netherlands | – | – | – | – | (*) | – | (*) | – | 364.0 | 0.83 | % |
(*) | Cross-border outstandings were less than 0.75% of total consolidated assets |
(**) | Claims from Bank counterparts include claims outstanding from derivative products. |
December 31, 2014 | December 31, 2013 | December 31, 2012 | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Commercial airlines (including regional airlines)(1) | $ | 10,313.7 | 28.9 | % | $ | 8,972.4 | 27.5 | % | $ | 9,039.2 | 29.9 | % | |||||||||||||||
Manufacturing(2) | 4,702.6 | 13.2 | % | 4,311.9 | 13.2 | % | 4,181.1 | 13.8 | % | ||||||||||||||||||
Retail(3) | 3,187.8 | 8.9 | % | 3,063.1 | 9.4 | % | 3,010.7 | 10.0 | % | ||||||||||||||||||
Transportation(4) | 2,872.5 | 8.1 | % | 2,515.9 | 7.7 | % | 2,379.6 | 7.9 | % | ||||||||||||||||||
Service industries | 2,553.6 | 7.2 | % | 3,123.4 | 9.6 | % | 3,039.8 | 10.1 | % | ||||||||||||||||||
Wholesale | 1,710.3 | 4.8 | % | 1,394.1 | 4.3 | % | 884.4 | 2.9 | % | ||||||||||||||||||
Real Estate | 1,590.5 | 4.5 | % | 1,351.4 | 4.1 | % | 694.5 | 2.3 | % | ||||||||||||||||||
Energy and utilities | 1,513.2 | 4.2 | % | 1,384.6 | 4.2 | % | 1,078.8 | 3.6 | % | ||||||||||||||||||
Oil and gas extraction / services | 1,483.4 | 4.2 | % | 1,157.1 | 3.5 | % | 990.3 | 3.3 | % | ||||||||||||||||||
Finance and insurance | 1,272.1 | 3.6 | % | 787.0 | 2.4 | % | 729.9 | 2.4 | % | ||||||||||||||||||
Healthcare | 1,159.7 | 3.3 | % | 1,393.1 | 4.3 | % | 1,466.7 | 4.8 | % | ||||||||||||||||||
Other (no industry greater than 2%) | 3,284.1 | 9.1 | % | 3,214.0 | 9.8 | % | 2,714.6 | 9.0 | % | ||||||||||||||||||
Total | $ | 35,643.5 | 100.0 | % | $ | 32,668.0 | 100.0 | % | $ | 30,209.6 | 100.0 | % |
(1) | Includes the Commercial Aerospace Portfolio and additional financing and leasing assets that are not commercial aircraft. |
(2) | At December 31, 2014, includes petroleum and coal, including refining (1.5%),manufacturers of chemicals, including pharmaceuticals (3.4%), Electrical and Electronic Equipment (1.0%) and Stone, Clay, Glass & Concrete (1.0%). |
(3) | At December 31, 2014, includes retailers of apparel (4.2%) and general merchandise (1.7%). |
(4) | At December 31, 2014, includes rail (3.9%), maritime (1.8%) and trucking and shipping (1.6%). |
Railcar Type | Owned Fleet | Purchase Orders | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Covered Hoppers | 45,026 | 5,826 | ||||||||
Tank Cars | 30,765 | 5,212 | ||||||||
Coal | 12,483 | – | ||||||||
Mill/Coil Gondolas | 14,128 | – | ||||||||
Boxcars | 8,539 | – | ||||||||
Flatcars | 5,524 | – | ||||||||
Locomotives | 390 | – | ||||||||
Other | 3,197 | – | ||||||||
Total | 120,052 | 11,038 |
Aircraft Type | Owned Fleet | Order Book | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Airbus A319/320/321 | 122 | 55 | ||||||||
Airbus A330 | 38 | 20 | ||||||||
Airbus A350 | – | 14 | ||||||||
Boeing 737 | 82 | 44 | ||||||||
Boeing 757 | 8 | – | ||||||||
Boeing 767 | 6 | – | ||||||||
Boeing 787 | 2 | 18 | ||||||||
Embraer 145 | 1 | – | ||||||||
Embraer 175 | 4 | – | ||||||||
Embraer 190/195 | 15 | 1 | ||||||||
Other | 1 | – | ||||||||
Total | 279 | 152 |
December 31, 2014 | December 31, 2013 | December 31, 2012 | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net Investment | Number | Net Investment | Number | Net Investment | Number | ||||||||||||||||||||||
By Product: | |||||||||||||||||||||||||||
Operating lease(1) | $ | 9,309.3 | 279 | $ | 8,379.3 | 270 | $ | 8,238.8 | 268 | ||||||||||||||||||
Loan(2) | 635.0 | 50 | 505.3 | 39 | 666.7 | 64 | |||||||||||||||||||||
Capital lease | 335.6 | 21 | 31.7 | 8 | 40.4 | 10 | |||||||||||||||||||||
Total | $ | 10,279.9 | 350 | $ | 8,916.3 | 317 | $ | 8,945.9 | 342 |
December 31, 2014 | December 31, 2013 | December 31, 2012 | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net Investment | Number | Net Investment | Number | Net Investment | Number | ||||||||||||||||||||||
By Region: | |||||||||||||||||||||||||||
Asia / Pacific | $ | 3,610.0 | 88 | $ | 3,065.1 | 81 | $ | 3,071.3 | 83 | ||||||||||||||||||
Europe | 2,135.4 | 82 | 2,408.8 | 91 | 2,343.2 | 86 | |||||||||||||||||||||
U.S. and Canada | 1,802.6 | 57 | 1,276.5 | 43 | 1,049.9 | 38 | |||||||||||||||||||||
Latin America | 994.9 | 37 | 940.3 | 38 | 1,020.2 | 42 | |||||||||||||||||||||
Africa / Middle East | 766.4 | 15 | 688.6 | 17 | 754.2 | 19 | |||||||||||||||||||||
Total | $ | 9,309.3 | 279 | $ | 8,379.3 | 270 | $ | 8,238.8 | 268 | ||||||||||||||||||
By Manufacturer: | |||||||||||||||||||||||||||
Airbus | $ | 5,985.5 | 160 | $ | 5,899.1 | 167 | $ | 5,602.6 | 162 | ||||||||||||||||||
Boeing | 2,711.6 | 98 | 2,038.7 | 87 | 2,301.0 | 94 | |||||||||||||||||||||
Embraer | 547.2 | 20 | 441.5 | 16 | 324.8 | 12 | |||||||||||||||||||||
Other | 65.0 | 1 | – | – | 10.4 | – | |||||||||||||||||||||
Total | $ | 9,309.3 | 279 | $ | 8,379.3 | 270 | $ | 8,238.8 | 268 | ||||||||||||||||||
By Body Type(3): | |||||||||||||||||||||||||||
Narrow body | $ | 6,287.8 | 230 | $ | 6,080.6 | 230 | $ | 5,966.6 | 227 | ||||||||||||||||||
Intermediate | 2,955.3 | 47 | 2,297.3 | 39 | 2,222.6 | 39 | |||||||||||||||||||||
Wide body | – | – | – | – | 37.5 | 1 | |||||||||||||||||||||
Regional and other | 66.2 | 2 | 1.4 | 1 | 12.1 | 1 | |||||||||||||||||||||
Total | $ | 9,309.3 | 279 | $ | 8,379.3 | 270 | $ | 8,238.8 | 268 | ||||||||||||||||||
Number of customers | 98 | 98 | 97 | ||||||||||||||||||||||||
Weighted average age of fleet (years) | 5 | 5 | 5 |
(1) | Includes operating lease equipment held for sale. |
(2) | Plane count excludes aircraft in which our net investment consists of syndicated financings against multiple aircraft. The net investment associated with such financings was $39 million at December 31, 2014, $45 million at December 31, 2013, and $50 million at December 31, 2012. |
(3) | Narrow body are single aisle design and consist primarily of Boeing 737 and 757 series, Airbus A320 series, and Embraer E170 and E190 aircraft. Intermediate body are smaller twin aisle design and consist primarily of Boeing 767 series and Airbus A330 series aircraft. Wide body are large twin aisle design, such as Boeing 747 and 777 series aircraft. Regional and Other includes aircraft and related equipment, such as engines. |
RISK MANAGEMENT
- | Strategic risk is the impact on earnings or capital arising from adverse strategic business decisions, improper implementation of strategic decisions, or lack of responsiveness to changes in the industry, including changes in the financial services industry as well as fundamental changes in the businesses in which our customers and our Company engages. |
- | Credit risk is the risk of loss (including the incurrence of additional expenses) when a borrower does not meet its financial obligations to the Company. Credit risk may arise from lending, leasing, and/or counterparty activities. |
- | Asset risk is the equipment valuation and residual risk of lease equipment owned by the Company that arises from fluctuations in the supply and demand for the underlying leased equipment. The Company is exposed to the risk that, at the end of the lease term, the value of the asset will be lower than expected, resulting in either reduced future lease income over the remaining life of the asset or a lower sale value. |
- | Market risk includes interest rate risk and foreign currency risk. Interest rate risk is the impact that fluctuations in interest rates will have on the Company’s net finance revenue and on the market value of the Company’s assets, liabilities and derivatives. Foreign exchange risk is the economic impact that fluctuations in exchange rates between currencies can have on the Company’s non-dollar denominated assets and liabilities. |
- | Liquidity risk is the risk that the Company has an inability to maintain adequate cash resources and funding capacity to meet its obligations, including under stress scenarios. |
- | Capital risk is the risk that the Company does not have adequate capital to cover its risks and to support its growth and strategic objectives. |
- | Operational risk is the risk of financial loss, damage to the Company’s reputation, or other adverse impacts resulting from inadequate or failed internal processes and systems, people or external events. |
- | Information Technology Risk is the risk of financial loss, damage to the company’s reputation or other adverse impacts resulting from unauthorized (malicious or accidental) disclosure, modification, or destruction of information, including cyber-crime, unintentional errors and omissions, IT disruptions due to natural or man-made disasters, or failure to exercise due care and diligence in the implementation and operation of an IT system. |
- | Legal and Regulatory Risk is the risk that the Company is not in compliance with applicable laws and regulations, which may result in fines, regulatory criticism or business restrictions, or damage to the Company’s reputation. |
- | Reputational Risk is the potential that negative publicity, whether true or not, will cause a decline in the value of the Company due to changes in the customer base, costly litigation, or other revenue reductions. |
- | the major risks inherent to CIT’s business activities, as defined above; |
- | the Enterprise Risk Framework, which includes the policies, procedures, practices and resources used to manage and assess these risks, and the decision-making governance structure that supports it; |
- | the Risk Appetite and Risk Tolerance Framework, which defines the level and type of risk CIT is willing to assume in its exposures and business activities, given its business objectives, and sets limits, credit authorities, target performance metrics, underwriting standards and risk acceptance criteria used to define and guide the decision-making processes; and |
- | management information systems, including data, models, analytics and risk reporting, to enable adequate identification, monitoring and reporting of risks for proactive management. |
- | Net Interest Income Sensitivity (“NII Sensitivity”), which measures the net impact of hypothetical changes in interest rates on net finance revenue; and |
- | Economic Value of Equity (“EVE”), which measures the net impact of these hypothetical changes on the value of equity by assessing the market value of assets, liabilities and derivatives. |
ability to attract and hold deposits. In a rising rate environment, the Bank may need to increase rates to renew maturing deposits and attract new deposits. Rates on our savings account deposits may fluctuate due to pricing competition and may also move with short-term interest rates, on a lagging basis. In general, retail deposits represent a low-cost source of funds and are less sensitive to interest rate changes than many non-deposit funding sources. Our ability to gather brokered deposits may be more sensitive to rate changes than other types of deposits. We manage this risk by limiting maturity concentration and emphasizing new issuance in long-dated maturities of up to ten years. We regularly stress test the effect of deposit rate changes on our margins and seek to achieve optimal alignment between assets and liabilities from an interest rate risk management perspective.
December 31, 2014 | December 31, 2013 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
+100 bps | –100 bps | +100 bps | –100 bps | ||||||||||||||||
NII Sensitivity | 6.4 | % | (0.8 | )% | 6.1 | % | (0.9 | )% | |||||||||||
EVE | 1.9 | % | (1.6 | )% | 1.8 | % | (2.0 | )% |
non-dollar denominated activities. Additionally, we have utilized derivative instruments to hedge the translation exposure of our net investments in foreign operations.
FUNDING AND LIQUIDITY
- | Cash totaled $7.1 billion at December 31, 2014, compared to $6.0 billion at December 31, 2013 and $6.7 billion at December 31, 2012. Cash at December 31, 2014 consisted of $1.6 billion related to the bank holding company, and |
$3.7 billion at CIT Bank (including $0.1 billion of restricted cash), with the remainder comprised of cash at operating subsidiaries and other restricted balances of approximately $0.9 billion each. During February 2015, $1.2 billion of cash was used to repay maturing unsecured notes. | ||
- | Securities purchased under agreements to resell (“reverse repurchase agreements”) totaled $650 million at December 31, 2014. Beginning in the third quarter, CIT entered into reverse repurchase agreements in an effort to improve returns on excess liquidity. These agreements are short-term securities that had maturity dates of 90 days or less, had a weighted average yield of approximately 50 bps and are secured by the underlying collateral, which is maintained at a third-party custodian. Interest earned on these securities is included in ’Other interest and dividends’ in the statement of operations. SeeNote 6 — Securities Purchased Under Resale Agreements inItem 8 Financial Statements and Supplementary Data for further details. |
- | Short-term investment securities totaled $1.1 billion at December 31, 2014, which consisted of U.S. Government Agency discount notes and U.S. Treasury bills that were classified as AFS and had remaining maturity dates of 90 days or less, compared to $1.5 billion at December 31, 2013 and $0.8 billion at December 31, 2012. The 2013 balance did not include $0.7 billion of certain securities that were classified as HTM. |
- | A $1.5 billion multi-year committed revolving credit facility, of which $1.4 billion was unused at December 31, 2014; and |
- | Committed securitization facilities and secured bank lines that totaled $4.8 billion, of which $2.8 billion was unused at December 31, 2014, provided that eligible assets are available that can be funded through these facilities. |
2014 | 2013 | 2012 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Deposits | 46 | % | 40 | % | 35 | % | ||||||||
Secured | 19 | % | 19 | % | 23 | % | ||||||||
Unsecured | 35 | % | 41 | % | 42 | % |
2014 | 2013 | 2012 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Online deposits | $ | 8,858.5 | $ | 6,117.5 | $ | 4,643.4 | ||||||||
Brokered CDs / sweeps | 5,986.0 | 5,365.4 | 4,251.6 | |||||||||||
Other(1) | 1,005.3 | 1,043.6 | 789.5 | |||||||||||
Total | $ | 15,849.8 | $ | 12,526.5 | $ | 9,684.5 |
(1) | Other primarily includes a deposit sweep arrangement related to Healthcare Savings Accounts and deposits at our Brazil bank. |
- | On November 12, 2014, CIT repurchased $300 million of 4.75% unsecured notes that had a maturity date in February 2015, and recorded a $3 million loss on extinguishment. The remaining $1.2 billion of this tranche was outstanding at December 31, 2014 and repaid in February 2015. |
- | On April 1, 2014, we repaid $1.3 billion of maturing 5.25% unsecured notes. |
- | On February 19, 2014, CIT issued, at par value, $1 billion aggregate principal amount of senior unsecured notes due 2019 that bear interest at a rate of 3.875%. |
- | In the first quarter, CIT renewed a CAD 250 million committed multi-year conduit facility that allows the Canadian Equipment Finance business to fund both existing assets and new originations at attractive terms. |
- | In the second quarter, CIT Bank renewed and extended to 2016 an existing $1 billion committed multi-year Equipment Finance conduit facility. |
- | In the third quarter, CIT closed a $640 million aerospace securitization, and funded it within the GSI TRS. |
- | During the fourth quarter, CIT Bank closed a $750 million equipment lease securitization that had a weighted average coupon of 1.37% and was secured by U.S. equipment finance receivables. |
- | CIT’s funding costs for similar financings based on the current market environment; |
- | Forecasted usage of the long-dated GSI Facilities through the final maturity date in 2028; and |
- | Forecasted amortization, due to principal payments on the underlying ABS, which impacts the amount of the unutilized portion. |
- | A fixed facility fee of 2.85% per annum times the maximum facility commitment amount, |
- | A variable amount based on one-month or three-month USD LIBOR times the “utilized amount” (effectively the “adjusted qualifying borrowing base”) of the total return swap, and |
- | A reduction in interest expense due to the recognition of the payment of any OID from GSI on the various asset-backed securities. |
S&P | Fitch | Moody’s | DBRS | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Issuer / Counterparty Credit Rating | BB- | BB+ | Ba3 | BB | ||||||
Revolving Credit Facility Rating | BB- | BB+ | Ba3 | BBB (Low) | ||||||
Series C Notes / Senior Unsecured Debt Rating | BB- | BB+ | Ba3 | BB | ||||||
Outlook | Positive | Stable | Stable | Positive | ||||||
Total | 2015 | 2016 | 2017 | 2018 | 2019+ | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Secured borrowings(2) | $ | 6,514.0 | $ | 1,853.3 | $ | 1,125.8 | $ | 893.2 | $ | 626.1 | $ | 2,015.6 | ||||||||||||||
Senior unsecured | 11,951.4 | 1,200.0 | – | 3,000.0 | 2,200.0 | 5,551.4 | ||||||||||||||||||||
Long-term borrowings | 18,465.4 | 3,053.3 | 1,125.8 | 3,893.2 | 2,826.1 | 7,567.0 | ||||||||||||||||||||
Deposits | 15,851.2 | 6,988.4 | 1,670.6 | 2,398.2 | 928.2 | 3,865.8 | ||||||||||||||||||||
Credit balances of factoring clients | 1,622.1 | 1,622.1 | – | – | – | – | ||||||||||||||||||||
Lease rental expense | 170.2 | 31.3 | 29.5 | 25.7 | 24.5 | 59.2 | ||||||||||||||||||||
Total contractual payments | $ | 36,108.9 | $ | 11,695.1 | $ | 2,825.9 | $ | 6,317.1 | $ | 3,778.8 | $ | 11,492.0 |
(1) | Projected payments of debt interest expense and obligations relating to postretirement programs are excluded. |
(2) | Includes non-recourse secured borrowings, which are generally repaid in conjunction with the pledged receivable maturities, and excludes debt associated with discontinued operation. |
Total | 2015 | 2016 | 2017 | 2018 | 2019+ | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Financing commitments | $ | 4,747.9 | $ | 729.4 | $ | 838.8 | $ | 947.8 | $ | 957.4 | $ | 1,274.5 | ||||||||||||||
Aerospace manufacturer purchase commitments(1) | 10,820.4 | 945.7 | 534.2 | 847.0 | 2,211.0 | 6,282.5 | ||||||||||||||||||||
Rail and other manufacturer purchase commitments | 1,323.2 | 943.0 | 380.2 | – | – | – | ||||||||||||||||||||
Letters of credit | 388.4 | 51.7 | 35.8 | 60.1 | 84.1 | 156.7 | ||||||||||||||||||||
Deferred purchase agreements | 1,854.4 | 1,854.4 | – | – | – | – | ||||||||||||||||||||
Guarantees, acceptances and other recourse obligations | 2.8 | 2.8 | – | – | – | – | ||||||||||||||||||||
Liabilities for unrecognized tax obligations(2) | 53.7 | 10.0 | 43.7 | – | – | – | ||||||||||||||||||||
Total contractual commitments | $ | 19,190.8 | $ | 4,537.0 | $ | 1,832.7 | $ | 1,854.9 | $ | 3,252.5 | $ | 7,713.7 |
(1) | Aerospace commitments are net of amounts on deposit with manufacturers. |
(2) | The balance cannot be estimated past 2016; therefore the remaining balance is reflected in 2016. |
CAPITAL
Declaration Date | Payment Date | Per Share Dividend | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
January | February 28, 2014 | $ | 0.10 | |||||||
April | May 30, 2014 | $ | 0.10 | |||||||
July | August 29, 2014 | $ | 0.15 | |||||||
October | November 26, 2014 | $ | 0.15 |
December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Tier 1 Capital | 2014 | 2013 | 2012 | ||||||||||||
Total stockholders’ equity | $ | 9,068.9 | $ | 8,838.8 | $ | 8,334.8 | |||||||||
Effect of certain items in accumulated other comprehensive loss excluded from Tier 1 Capital and qualifying noncontrolling interests | 53.0 | 24.2 | 41.1 | ||||||||||||
Adjusted total equity | 9,121.9 | 8,863.0 | 8,375.9 | ||||||||||||
Less: Goodwill(1) | (571.3 | ) | (338.3 | ) | (345.9 | ) | |||||||||
Disallowed deferred tax assets | (416.8 | ) | (26.6 | ) | (61.4 | ) | |||||||||
Disallowed intangible assets(1) | (25.7 | ) | (20.3 | ) | (32.7 | ) | |||||||||
Investment in certain subsidiaries | (36.7 | ) | (32.3 | ) | (34.4 | ) | |||||||||
Other Tier 1 components(2) | (4.1 | ) | (6.0 | ) | (6.6 | ) | |||||||||
Tier 1 Capital | 8,067.3 | 8,439.5 | 7,894.9 | ||||||||||||
Tier 2 Capital | |||||||||||||||
Qualifying reserve for credit losses and other reserves(3) | 381.8 | 383.9 | 402.6 | ||||||||||||
Less: Investment in certain subsidiaries | (36.7 | ) | (32.3 | ) | (34.4 | ) | |||||||||
Other Tier 2 components(4) | – | 0.1 | 0.5 | ||||||||||||
Total qualifying capital | $ | 8,412.4 | $ | 8,791.2 | $ | 8,263.6 | |||||||||
Risk-weighted assets | $ | 55,480.9 | $ | 50,571.2 | $ | 48,616.9 | |||||||||
BHC Ratios | |||||||||||||||
Tier 1 Capital Ratio | 14.5 | % | 16.7 | % | 16.2 | % | |||||||||
Total Capital Ratio | 15.2 | % | 17.4 | % | 17.0 | % | |||||||||
Tier 1 Leverage Ratio | 17.4 | % | 18.1 | % | 18.3 | % | |||||||||
CIT Bank Ratios | |||||||||||||||
Tier 1 Capital Ratio | 13.0 | % | 16.8 | % | 21.5 | % | |||||||||
Total Capital Ratio | 14.2 | % | 18.1 | % | 22.7 | % | |||||||||
Tier 1 Leverage Ratio | 12.2 | % | 16.9 | % | 20.2 | % |
(1) | Goodwill and disallowed intangible assets adjustments also reflect the portion included within assets held for sale. |
(2) | Includes the Tier 1 capital charge for nonfinancial equity investments and the Tier 1 capital deduction for net unrealized losses on available-for-sale marketable securities (net of tax). |
(3) | “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. |
(4) | Banking organizations are permitted to include in Tier 2 Capital up to 45% of net unrealized pretax gains on available-for-sale equity securities with readily determinable fair values. |
- | In the third quarter, we recorded a partial reversal of our U.S. Federal deferred tax asset valuation allowance of $375 million. In the fourth quarter, an additional $44 million was recorded for the reversal of the valuation allowance related to our international deferred tax assets. These reversals benefited net income and stockholders’ equity but had minimal impact on our regulatory capital ratios as the majority of the deferred tax asset balance is disallowed for regulatory capital purposes. |
- | The increase in goodwill and intangible assets due to the acquisitions of Direct Capital in the third quarter and Nacco in the first quarter, is also disallowed for regulatory capital purposes. |
December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Balance sheet assets | $ | 47,880.0 | $ | 47,139.0 | $ | 44,012.0 | |||||||||
Risk weighting adjustments to balance sheet assets | (8,647.8 | ) | (10,328.1 | ) | (9,960.4 | ) | |||||||||
Off balance sheet items | 16,248.7 | 13,760.3 | 14,565.3 | ||||||||||||
Risk-weighted assets | $ | 55,480.9 | $ | 50,571.2 | $ | 48,616.9 |
December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Total common stockholders’ equity | $ | 9,068.9 | $ | 8,838.8 | $ | 8,334.8 | |||||||||
Less: Goodwill | (571.3 | ) | (334.6 | ) | (345.9 | ) | |||||||||
Intangible assets | (25.7 | ) | (20.3 | ) | (31.9 | ) | |||||||||
Tangible book value | $ | 8,471.9 | $ | 8,483.9 | $ | 7,957.0 | |||||||||
Book value per share | $ | 50.13 | $ | 44.78 | $ | 41.49 | |||||||||
Tangible book value per share | $ | 46.83 | $ | 42.98 | $ | 39.61 |
(1) | Tangible book value and tangible book value per share are non-GAAP measures. |
CIT BANK
At December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
ASSETS: | �� | ||||||||||||||
Cash and deposits with banks | $ | 3,684.9 | $ | 2,528.6 | $ | 3,351.3 | |||||||||
Investment securities | 285.2 | 234.6 | 123.3 | ||||||||||||
Assets held for sale | 22.8 | 104.5 | 37.7 | ||||||||||||
Commercial loans | 14,982.8 | 12,032.6 | 8,060.5 | ||||||||||||
Allowance for loan losses | (269.5 | ) | (212.9 | ) | (134.6 | ) | |||||||||
Operating lease equipment, net | 2,026.3 | 1,248.9 | 621.6 | ||||||||||||
Goodwill | 167.8 | – | – | ||||||||||||
Other assets | 215.7 | 195.0 | 164.6 | ||||||||||||
Total Assets | $ | 21,116.0 | $ | 16,131.3 | $ | 12,224.4 | |||||||||
LIABILITIES AND EQUITY: | |||||||||||||||
Deposits | $ | 15,877.9 | $ | 12,496.2 | $ | 9,614.7 | |||||||||
Long-term borrowings | 1,862.5 | 854.6 | 49.6 | ||||||||||||
Other borrowings | 303.1 | – | – | ||||||||||||
Other liabilities | 356.1 | 183.9 | 122.7 | ||||||||||||
Total Liabilities | 18,399.6 | 13,534.7 | 9,787.0 | ||||||||||||
Total Equity | 2,716.4 | 2,596.6 | 2,437.4 | ||||||||||||
Total Liabilities and Equity | $ | 21,116.0 | $ | 16,131.3 | $ | 12,224.4 | |||||||||
Capital Ratios: | |||||||||||||||
Tier 1 Capital Ratio | 13.0 | % | 16.8 | % | 21.5 | % | |||||||||
Total Capital Ratio | 14.2 | % | 18.1 | % | 22.7 | % | |||||||||
Tier 1 Leverage ratio | 12.2 | % | 16.9 | % | 20.2 | % | |||||||||
Financing and Leasing Assets by Segment: | |||||||||||||||
North American Commercial Finance | $ | 12,518.8 | $ | 10,701.1 | $ | 7,280.7 | |||||||||
Transportation & International Finance | 4,513.1 | 2,606.8 | 1,370.6 | ||||||||||||
Non-Strategic Portfolios | – | 78.1 | 68.5 | ||||||||||||
Total | $ | 17,031.9 | $ | 13,386.0 | $ | 8,719.8 |
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Interest income | $ | 712.1 | $ | 550.5 | $ | 381.0 | |||||||||
Interest expense | (245.1 | ) | (172.1 | ) | (191.7 | ) | |||||||||
Net interest revenue | 467.0 | 378.4 | 189.3 | ||||||||||||
Provision for credit losses | (99.1 | ) | (93.1 | ) | (93.9 | ) | |||||||||
Net interest revenue, after credit provision | 367.9 | 285.3 | 95.4 | ||||||||||||
Rental income on operating leases | 227.2 | 110.2 | 26.8 | ||||||||||||
Other income | 114.2 | 123.7 | 144.7 | ||||||||||||
Total net revenue, net of interest expense and credit provision | 709.3 | 519.2 | 266.9 | ||||||||||||
Operating expenses | (412.3 | ) | (296.9 | ) | (176.6 | ) | |||||||||
Depreciation on operating lease equipment | (92.3 | ) | (44.4 | ) | (9.8 | ) | |||||||||
Income before provision for income taxes | 204.7 | 177.9 | 80.5 | ||||||||||||
Provision for income taxes | (81.6 | ) | (69.4 | ) | (39.4 | ) | |||||||||
Net income | $ | 123.1 | $ | 108.5 | $ | 41.1 | |||||||||
New business volume | $ | 7,845.7 | $ | 7,148.2 | $ | 6,024.7 |
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Interest income | $ | 712.1 | $ | 550.5 | $ | 381.0 | |||||||||
Rental income on operating leases | 227.2 | 110.2 | 26.8 | ||||||||||||
Finance revenue | 939.3 | 660.7 | 407.8 | ||||||||||||
Interest expense | (245.1 | ) | (172.1 | ) | (191.7 | ) | |||||||||
Depreciation on operating lease equipment | (92.3 | ) | (44.4 | ) | (9.8 | ) | |||||||||
Maintenance and other operating lease expenses* | (8.2 | ) | (2.9 | ) | (1.3 | ) | |||||||||
Net finance revenue | $ | 593.7 | $ | 441.3 | $ | 205.0 | |||||||||
Average Earning Assets (“AEA”) | $ | 15,344.0 | $ | 11,048.2 | $ | 7,181.6 | |||||||||
As a % of AEA: | |||||||||||||||
Interest income | 4.64 | % | 4.98 | % | 5.31 | % | |||||||||
Rental income on operating leases | 1.48 | % | 1.00 | % | 0.37 | % | |||||||||
Finance revenue | 6.12 | % | 5.98 | % | 5.68 | % | |||||||||
Interest expense | (1.60 | )% | (1.56 | )% | (2.67 | )% | |||||||||
Depreciation on operating lease equipment | (0.60 | )% | (0.40 | )% | (0.14 | )% | |||||||||
Maintenance and other operating lease expenses* | (0.05 | )% | (0.03 | )% | (0.02 | )% | |||||||||
Net finance revenue | 3.87 | % | 3.99 | % | 2.85 | % |
* | Amounts included in CIT Bank operating expenses. |
CRITICAL ACCOUNTING ESTIMATES
income. We generally bear greater residual risk in operating lease transactions (versus finance lease transactions) as the duration of an operating lease is shorter relative to the equipment useful life than a finance lease. Management performs periodic reviews of residual values, with other than temporary impairment recognized in the current period as an increase to depreciation expense for operating lease residual impairment, or as an adjustment to yield for value adjustments on finance leases. Data regarding current equipment values, including appraisals, and historical residual realization experience are among the factors considered in evaluating estimated residual values. As of December 31, 2014, our direct financing lease residual balance was $0.7 billion and our total operating lease equipment balance totaled $14.9 billion.
INTERNAL CONTROLS WORKING GROUP
NON-GAAP FINANCIAL MEASUREMENTS
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Total Net Revenue | |||||||||||||||
Interest income | $ | 1,226.5 | $ | 1,255.2 | $ | 1,394.0 | |||||||||
Rental income on operating leases | 2,093.0 | 1,897.4 | 1,900.8 | ||||||||||||
Finance revenue | 3,319.5 | 3,152.6 | 3,294.8 | ||||||||||||
Interest expense | (1,086.2 | ) | (1,060.9 | ) | (2,665.7 | ) | |||||||||
Depreciation on operating lease equipment | (615.7 | ) | (540.6 | ) | (513.2 | ) | |||||||||
Maintenance and other operating lease expenses | (196.8 | ) | (163.1 | ) | (139.4 | ) | |||||||||
Net finance revenue | 1,420.8 | 1,388.0 | (23.5 | ) | |||||||||||
Other income | 305.4 | 381.3 | 614.7 | ||||||||||||
Total net revenue | $ | 1,726.2 | $ | 1,769.3 | $ | 591.2 | |||||||||
Net Operating Lease Revenue | |||||||||||||||
Rental income on operating leases | $ | 2,093.0 | $ | 1,897.4 | $ | 1,900.8 | |||||||||
Depreciation on operating lease equipment | (615.7 | ) | (540.6 | ) | (513.2 | ) | |||||||||
Maintenance and other operating lease expenses | (196.8 | ) | (163.1 | ) | (139.4 | ) | |||||||||
Net operating lease revenue | $ | 1,280.5 | $ | 1,193.7 | $ | 1,248.2 |
Years Ended December 31, | |||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||||||||||||||
NFR / NFM | $ | 1,420.8 | 4.25 | % | $ | 1,388.0 | 4.61 | % | $ | (23.5 | ) | (0.09 | )% | ||||||||||||||
Accelerated FSA net discount on debt extinguishments and repurchases | 34.7 | 0.10 | % | 34.6 | 0.12 | % | 1,294.9 | 4.69 | % | ||||||||||||||||||
Accelerated OID on debt extinguishments related to the GSI facility | (42.0 | ) | (0.12 | )% | (5.2 | ) | (0.02 | )% | (6.9 | ) | (0.02 | )% | |||||||||||||||
Adjusted NFR and NFM | $ | 1,413.5 | 4.23 | % | $ | 1,417.4 | 4.71 | % | $ | 1,264.5 | 4.58 | % |
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Operating expenses | $ | (941.8 | ) | $ | (970.2 | ) | $ | (894.0 | ) | ||||||
Provision for severance and facilities exiting activities | 31.4 | 36.9 | 22.7 | ||||||||||||
Operating expenses excluding restructuring costs | $ | (910.4 | ) | $ | (933.3 | ) | $ | (871.3 | ) |
December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Loans | $ | 19,495.0 | $ | 18,629.2 | $ | 17,153.1 | |||||||||
Operating lease equipment, net | 14,930.4 | 13,035.4 | 12,411.7 | ||||||||||||
Assets held for sale | 1,218.1 | 1,003.4 | 644.8 | ||||||||||||
Credit balances of factoring clients | (1,622.1 | ) | (1,336.1 | ) | (1,256.5 | ) | |||||||||
Total earning assets | $ | 34,021.4 | $ | 31,331.9 | $ | 28,953.1 |
December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Total common stockholders’ equity | $ | 9,068.9 | $ | 8,838.8 | $ | 8,334.8 | |||||||||
Less: Goodwill | (571.3 | ) | (334.6 | ) | (345.9 | ) | |||||||||
Intangible assets | (25.7 | ) | (20.3 | ) | (31.9 | ) | |||||||||
Tangible book value | $ | 8,471.9 | $ | 8,483.9 | $ | 7,957.0 |
December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Total assets | $ | 47,880.0 | $ | 47,139.0 | $ | 44,012.0 | |||||||||
Assets of discontinued operation | – | (3,821.4 | ) | (4,202.6 | ) | ||||||||||
Continuing operations total assets | $ | 47,880.0 | $ | 43,317.6 | $ | 39,809.4 |
(1) | Total net revenues is a non-GAAP measure that represents the combination of net finance revenue and other income and is an aggregation of all sources of revenue for the Company. Total net revenues is used by management to monitor business performance. Given our asset composition includes a high level of operating lease equipment, NFM is a more appropriate metric than net interest margin (“NIM”) (a common metric used by other bank holding companies), as NIM does not fully reflect the earnings of our portfolio because it includes the impact of debt costs of all our assets but excludes the net revenue (rental revenue less depreciation and maintenance and other operating lease expenses) from operating leases. |
(2) | Net operating lease revenue is a non-GAAP measure that represents the combination of rental income on operating leases less depreciation on operating lease equipment and maintenance and other operating lease expenses. Net operating lease revenues is used by management to monitor portfolio performance. |
(3) | Operating expenses excluding restructuring costs is a non-GAAP measure used by management to compare period over period expenses. |
(4) | Earning assets is a non-GAAP measure and are utilized in certain revenue and earnings ratios. Earning assets are net of credit balances of factoring clients. This net amount represents the amounts we fund. |
(5) | Continuing operations total assets is a non-GAAP measure, which management uses for analytical purposes to compare balance sheet assets on a consistent basis. |
(6) | Tangible book value is a non-GAAP measure, which represents an adjusted common shareholders’ equity balance that has been reduced by goodwill and intangible assets. Tangible book value is used to compute a per common share amount, which is used to evaluate our use of equity. |
FORWARD-LOOKING STATEMENTS
- | 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, and for a return of capital, |
- | our plans to change our funding mix and to access new sources of funding to broaden our use of deposit taking capabilities, |
- | our credit risk management and credit quality, |
- | our asset/liability risk management, |
- | our funding, borrowing costs and net finance revenue, |
- | our operational risks, including success of systems enhancements and expansion of risk management and control functions, |
- | our mix of portfolio asset classes, including growth initiatives, new business initiatives, new products, acquisitions and divestitures, new business and customer retention, |
- | legal risks, including related to the enforceability of our agreements and to changes in laws and regulations, |
- | our growth rates, |
- | our commitments to extend credit or purchase equipment, and |
- | how we may be affected by legal proceedings. |
- | capital markets liquidity, |
- | risks of and/or actual economic slowdown, downturn or recession, |
- | industry cycles and trends, |
- | uncertainties associated with risk management, including credit, prepayment, asset/liability, interest rate and currency risks, |
- | adequacy of reserves for credit losses, |
- | risks inherent in changes in market interest rates and quality spreads, |
- | funding opportunities, deposit taking capabilities and borrowing costs, |
- | conditions and/or changes in funding markets and our access to such markets, including secured and unsecured term debt and the asset-backed securitization markets, |
- | risks of implementing new processes, procedures, and systems, |
- | risks associated with the value and recoverability of leased equipment and lease residual values, |
- | risks of failing to achieve the projected revenue growth from new business initiatives or the projected expense reductions from efficiency improvements, |
- | application of fair value accounting in volatile markets, |
- | application of goodwill accounting in a recessionary economy, |
- | changes in laws or regulations governing our business and operations, or affecting our assets, including our operating lease equipment, |
- | changes in competitive factors, |
- | demographic trends, |
- | customer retention rates, |
- | future acquisitions and dispositions of businesses or asset portfolios, and |
- | regulatory changes and/or developments. |
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
New York, New York
February 20, 2015
CIT GROUP INC. AND SUBSIDIARIES
December 31, 2014 | December 31, 2013 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Assets | ||||||||||
Cash and due from banks, including restricted balances of $374.0 and $178.1 at December 31, 2014 and 2013(1), respectively | $ | 878.5 | $ | 680.1 | ||||||
Interest bearing deposits, including restricted balances of $590.2 and $785.5 at December 31, 2014 and 2013(1), respectively | 6,241.2 | 5,364.6 | ||||||||
Securities purchased under agreements to resell | 650.0 | – | ||||||||
Investment securities | 1,550.3 | 2,630.7 | ||||||||
Assets held for sale(1) | 1,218.1 | 1,003.4 | ||||||||
Loans (see Note 10 for amounts pledged) | 19,495.0 | 18,629.2 | ||||||||
Allowance for loan losses | (346.4 | ) | (356.1 | ) | ||||||
Total loans, net of allowance for loan losses(1) | 19,148.6 | 18,273.1 | ||||||||
Operating lease equipment, net (see Note 10 for amounts pledged)(1) | 14,930.4 | 13,035.4 | ||||||||
Unsecured counterparty receivable | 559.2 | 301.6 | ||||||||
Goodwill | 571.3 | 334.6 | ||||||||
Other assets, including $168.0 and $50.3 at December 31, 2014 and 2013, respectively, at fair value | 2,132.4 | 1,694.1 | ||||||||
Assets of discontinued operation(1) | – | 3,821.4 | ||||||||
Total Assets | $ | 47,880.0 | $ | 47,139.0 | ||||||
Liabilities | ||||||||||
Deposits | $ | 15,849.8 | $ | 12,526.5 | ||||||
Credit balances of factoring clients | 1,622.1 | 1,336.1 | ||||||||
Other liabilities, including $62.3 and $111.0 at December 31, 2014 and 2013, respectively, at fair value | 2,888.8 | 2,664.3 | ||||||||
Long-term borrowings, including $3,053.3 and $2,510.5 contractually due within twelve months at December 31, 2014 and December 31, 2013, respectively | 18,455.8 | 18,484.5 | ||||||||
Liabilities of discontinued operation(1) | – | 3,277.6 | ||||||||
Total Liabilities | 38,816.5 | 38,289.0 | ||||||||
Stockholders’ Equity | ||||||||||
Common stock: $0.01 par value, 600,000,000 authorized | ||||||||||
Issued: 203,127,291 and 202,182,395 at December 31, 2014 and 2013, respectively | 2.0 | 2.0 | ||||||||
Outstanding: 180,920,575 and 197,403,751 at December 31, 2014 and 2013, respectively | ||||||||||
Paid-in capital | 8,603.6 | 8,555.4 | ||||||||
Retained earnings | 1,615.7 | 581.0 | ||||||||
Accumulated other comprehensive loss | (133.9 | ) | (73.6 | ) | ||||||
Treasury stock: 22,206,716 and 4,778,644 shares at December 31, 2014 and 2013 at cost, respectively | (1,018.5 | ) | (226.0 | ) | ||||||
Total Common Stockholders’ Equity | 9,068.9 | 8,838.8 | ||||||||
Noncontrolling minority interests | (5.4 | ) | 11.2 | |||||||
Total Equity | 9,063.5 | 8,850.0 | ||||||||
Total Liabilities and Equity | $ | 47,880.0 | $ | 47,139.0 |
(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 interest 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 | $ | 537.3 | $ | 516.4 | ||||||||||
Assets held for sale | – | 96.7 | ||||||||||||
Total loans, net of allowance for loan losses | 3,619.2 | 3,109.7 | ||||||||||||
Operating lease equipment, net | 4,219.7 | 4,569.9 | ||||||||||||
Other | 10.0 | 11.9 | ||||||||||||
Assets of discontinued operation | – | 3,438.2 | ||||||||||||
Total Assets | $ | 8,386.2 | $ | 11,742.8 | ||||||||||
Liabilities | ||||||||||||||
Beneficial interests issued by consolidated VIEs (classified as long-term borrowings) | $ | 5,331.5 | $ | 5,156.4 | ||||||||||
Liabilities of discontinued operation | – | 3,265.6 | ||||||||||||
Total Liabilities | $ | 5,331.5 | $ | 8,422.0 |
CIT GROUP INC. AND SUBSIDIARIES
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Interest income | |||||||||||||||
Interest and fees on loans | $ | 1,191.0 | $ | 1,226.3 | $ | 1,361.8 | |||||||||
Interest and dividends on interest bearing deposits and investments | 35.5 | 28.9 | 32.2 | ||||||||||||
Interest income | 1,226.5 | 1,255.2 | 1,394.0 | ||||||||||||
Interest expense | |||||||||||||||
Interest on long-term borrowings | (855.2 | ) | (881.1 | ) | (2,513.2 | ) | |||||||||
Interest on deposits | (231.0 | ) | (179.8 | ) | (152.5 | ) | |||||||||
Interest expense | (1,086.2 | ) | (1,060.9 | ) | (2,665.7 | ) | |||||||||
Net interest revenue | 140.3 | 194.3 | (1,271.7 | ) | |||||||||||
Provision for credit losses | (100.1 | ) | (64.9 | ) | (51.4 | ) | |||||||||
Net interest revenue, after credit provision | 40.2 | 129.4 | (1,323.1 | ) | |||||||||||
Non-interest income | |||||||||||||||
Rental income on operating leases | 2,093.0 | 1,897.4 | 1,900.8 | ||||||||||||
Other income | 305.4 | 381.3 | 614.7 | ||||||||||||
Total non-interest income | 2,398.4 | 2,278.7 | 2,515.5 | ||||||||||||
Total revenue, net of interest expense and credit provision | 2,438.6 | 2,408.1 | 1,192.4 | ||||||||||||
Other expenses | |||||||||||||||
Depreciation on operating lease equipment | (615.7 | ) | (540.6 | ) | (513.2 | ) | |||||||||
Maintenance and other operating lease expenses | (196.8 | ) | (163.1 | ) | (139.4 | ) | |||||||||
Operating expenses | (941.8 | ) | (970.2 | ) | (894.0 | ) | |||||||||
Loss on debt extinguishments | (3.5 | ) | – | (61.2 | ) | ||||||||||
Total other expenses | (1,757.8 | ) | (1,673.9 | ) | (1,607.8 | ) | |||||||||
Income (loss) from continuing operations before benefit (provision) for income taxes | 680.8 | 734.2 | (415.4 | ) | |||||||||||
Benefit (provision) for income taxes | 397.9 | (83.9 | ) | (116.7 | ) | ||||||||||
Income (loss) from continuing operations before attribution of noncontrolling interests | 1,078.7 | 650.3 | (532.1 | ) | |||||||||||
Net income attributable to noncontrolling interests, after tax | (1.2 | ) | (5.9 | ) | (3.7 | ) | |||||||||
Income (loss) from continuing operations | 1,077.5 | 644.4 | (535.8 | ) | |||||||||||
Discontinued operation | |||||||||||||||
Income (loss) from discontinued operation, net of taxes | (230.3 | ) | 31.3 | (56.5 | ) | ||||||||||
Gain on sale of discontinued operation, net of taxes | 282.8 | – | – | ||||||||||||
Income (loss) from discontinued operation, net of taxes | 52.5 | 31.3 | (56.5 | ) | |||||||||||
Net income (loss) | $ | 1,130.0 | $ | 675.7 | $ | (592.3 | ) | ||||||||
Basic income (loss) per common share | |||||||||||||||
Income (loss) from continuing operations | $ | 5.71 | $ | 3.21 | $ | (2.67 | ) | ||||||||
Income (loss) from discontinued operation, net of taxes | 0.28 | 0.16 | (0.28 | ) | |||||||||||
Basic income (loss) per common share | $ | 5.99 | $ | 3.37 | $ | (2.95 | ) | ||||||||
Diluted income (loss) per common share | |||||||||||||||
Income (loss) from continuing operations | $ | 5.69 | $ | 3.19 | $ | (2.67 | ) | ||||||||
Income (loss) from discontinued operation, net of taxes | 0.27 | 0.16 | (0.28 | ) | |||||||||||
Diluted income (loss) per common share | $ | 5.96 | $ | 3.35 | $ | (2.95 | ) | ||||||||
Average number of common shares – basic (thousands) | 188,491 | 200,503 | 200,887 | ||||||||||||
Average number of common shares – diluted (thousands) | 189,463 | 201,695 | 200,887 | ||||||||||||
Dividends declared per common share | $ | 0.50 | $ | 0.10 | $ | – |
CIT GROUP INC. AND SUBSIDIARIES
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Income (loss) from continuing operations, before attribution of noncontrolling interests | $ | 1,078.7 | $ | 650.3 | $ | (532.1 | ) | ||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Foreign currency translation adjustments | (26.0 | ) | (12.8 | ) | (8.4 | ) | |||||||||
Changes in fair values of derivatives qualifying as cash flow hedges | 0.2 | (0.1 | ) | 0.6 | |||||||||||
Net unrealized gains (losses) on available for sale securities | (0.1 | ) | (2.0 | ) | 1.0 | ||||||||||
Changes in benefit plans net gain (loss) and prior service (cost)/credit | (34.4 | ) | 19.0 | 11.7 | |||||||||||
Other comprehensive income (loss), net of tax | (60.3 | ) | 4.1 | 4.9 | |||||||||||
Comprehensive income (loss) before noncontrolling interests and discontinued operation | 1,018.4 | 654.4 | (527.2 | ) | |||||||||||
Comprehensive loss attributable to noncontrolling interests | (1.2 | ) | (5.9 | ) | (3.7 | ) | |||||||||
Income (loss) from discontinued operation, net of taxes | 52.5 | 31.3 | (56.5 | ) | |||||||||||
Comprehensive income (loss) | $ | 1,069.7 | $ | 679.8 | $ | (587.4 | ) |
Common Stock | Paid-in Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Noncontrolling Minority Interests | Total Equity | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2011 | $ | 2.0 | $ | 8,459.3 | $ | 517.7 | $ | (82.6 | ) | $ | (12.8 | ) | $ | 2.5 | $ | 8,886.1 | ||||||||||||||
Net income (loss) | (592.3 | ) | 3.7 | (588.6 | ) | |||||||||||||||||||||||||
Other comprehensive income, net of tax | 4.9 | 4.9 | ||||||||||||||||||||||||||||
Amortization of restricted stock, stock option, and performance share expenses | 41.6 | (3.9 | ) | 37.7 | ||||||||||||||||||||||||||
Employee stock purchase plan | 1.1 | 1.1 | ||||||||||||||||||||||||||||
Distribution of earnings and capital | (0.2 | ) | (1.5 | ) | (1.7 | ) | ||||||||||||||||||||||||
December 31, 2012 | $ | 2.0 | $ | 8,501.8 | $ | (74.6 | ) | $ | (77.7 | ) | $ | (16.7 | ) | $ | 4.7 | $ | 8,339.5 | |||||||||||||
Net income | 675.7 | 5.9 | 681.6 | |||||||||||||||||||||||||||
Other comprehensive income, net of tax | 4.1 | 4.1 | ||||||||||||||||||||||||||||
Dividends paid | (20.1 | ) | (20.1 | ) | ||||||||||||||||||||||||||
Amortization of restricted stock, stock option and performance shares expenses | 52.5 | (15.9 | ) | 36.6 | ||||||||||||||||||||||||||
Repurchase of common stock | (193.4 | ) | (193.4 | ) | ||||||||||||||||||||||||||
Employee stock purchase plan | 1.1 | 1.1 | ||||||||||||||||||||||||||||
Distribution of earnings and capital | 0.6 | 0.6 | ||||||||||||||||||||||||||||
December 31, 2013 | $ | 2.0 | $ | 8,555.4 | $ | 581.0 | $ | (73.6 | ) | $ | (226.0 | ) | $ | 11.2 | $ | 8,850.0 | ||||||||||||||
Net income | 1,130.0 | 1.2 | 1,131.2 | |||||||||||||||||||||||||||
Other comprehensive loss, net of tax | (60.3 | ) | (60.3 | ) | ||||||||||||||||||||||||||
Dividends paid | (95.3 | ) | (95.3 | ) | ||||||||||||||||||||||||||
Amortization of restricted stock, stock option and performance shares expenses | 47.1 | (17.0 | ) | 30.1 | ||||||||||||||||||||||||||
Repurchase of common stock | (775.5 | ) | (775.5 | ) | ||||||||||||||||||||||||||
Employee stock purchase plan | 1.1 | 1.1 | ||||||||||||||||||||||||||||
Distribution of earnings and capital | (17.8 | ) | (17.8 | ) | ||||||||||||||||||||||||||
December 31, 2014 | $ | 2.0 | $ | 8,603.6 | $ | 1,615.7 | $ | (133.9 | ) | $ | (1,018.5 | ) | $ | (5.4 | ) | $ | 9,063.5 |
CIT GROUP INC. AND SUBSIDIARIES
Years Ended December 31 | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Cash Flows From Operations | |||||||||||||||
Net income (loss) | $ | 1,130.0 | $ | 675.7 | $ | (592.3 | ) | ||||||||
Adjustments to reconcile net income (loss) to net cash flows from operations: | |||||||||||||||
Provision for credit losses | 100.1 | 64.9 | 51.6 | ||||||||||||
Net depreciation, amortization and accretion | 882.0 | 705.5 | 1,985.9 | ||||||||||||
Net gains on equipment, receivable and investment sales | (348.6 | ) | (187.2 | ) | (342.8 | ) | |||||||||
Loss on debt extinguishments | – | – | 21.1 | ||||||||||||
Provision for deferred income taxes | (426.7 | ) | 59.1 | 32.7 | |||||||||||
(Increase) decrease in finance receivables held for sale | (165.1 | ) | 404.8 | (54.9 | ) | ||||||||||
Increase in other assets | (34.9 | ) | (251.1 | ) | (106.2 | ) | |||||||||
Increase (decrease) in accrued liabilities and payables | 141.5 | (18.1 | ) | (86.6 | ) | ||||||||||
Net cash flows provided by operations | 1,278.3 | 1,453.6 | 908.5 | ||||||||||||
Cash Flows From Investing Activities | |||||||||||||||
Loans originated and purchased | (15,534.3 | ) | (18,243.1 | ) | (18,983.6 | ) | |||||||||
Principal collections of loans | 13,681.8 | 15,310.4 | 16,673.7 | ||||||||||||
Purchases of investment securities | (9,824.4 | ) | (16,538.8 | ) | (16,322.0 | ) | |||||||||
Proceeds from maturities of investment securities | 10,297.8 | 15,084.5 | 16,580.0 | ||||||||||||
Proceeds from asset and receivable sales | 3,817.2 | 1,875.4 | 4,499.3 | ||||||||||||
Purchases of assets to be leased and other equipment | (3,101.1 | ) | (2,071.8 | ) | (1,776.6 | ) | |||||||||
Net (increase) decrease in short-term factoring receivables | (8.0 | ) | 105.2 | 134.1 | |||||||||||
Acquisition, net of cash received | (448.6 | ) | – | – | |||||||||||
Net change in restricted cash | 93.8 | 127.0 | (314.0 | ) | |||||||||||
Net cash flows (used in) provided by investing activities | (1,025.8 | ) | (4,351.2 | ) | 490.9 | ||||||||||
Cash Flows From Financing Activities | |||||||||||||||
Proceeds from the issuance of term debt | 4,180.1 | 2,107.6 | 13,523.9 | ||||||||||||
Repayments of term debt | (5,874.7 | ) | (2,445.8 | ) | (19,542.2 | ) | |||||||||
Net increase in deposits | 3,323.9 | 2,846.1 | 3,499.8 | ||||||||||||
Collection of security deposits and maintenance funds | 551.8 | 543.9 | 563.4 | ||||||||||||
Use of security deposits and maintenance funds | (488.4 | ) | (495.8 | ) | (373.8 | ) | |||||||||
Repurchase of common stock | (775.5 | ) | (193.4 | ) | – | ||||||||||
Dividends paid | (95.3 | ) | (20.1 | ) | – | ||||||||||
Net cash flows provided by (used in) financing activities | 821.9 | 2,342.5 | (2,328.9 | ) | |||||||||||
Increase (decrease) in unrestricted cash and cash equivalents | 1,074.4 | (555.1 | ) | (929.5 | ) | ||||||||||
Unrestricted cash and cash equivalents, beginning of period | 5,081.1 | 5,636.2 | 6,565.7 | ||||||||||||
Unrestricted cash and cash equivalents, end of period | $ | 6,155.5 | $ | 5,081.1 | $ | 5,636.2 | |||||||||
Supplementary Cash Flow Disclosure | |||||||||||||||
Interest paid | $ | (1,049.5 | ) | $ | (997.8 | ) | $ | (1,240.0 | ) | ||||||
Federal, foreign, state and local income taxes (paid) collected, net | $ | (21.6 | ) | $ | (68.0 | ) | $ | 18.4 | |||||||
Supplementary Non Cash Flow Disclosure | |||||||||||||||
Transfer of assets from held for investment to held for sale | $ | 2,551.3 | $ | 5,141.9 | $ | 1,421.2 | |||||||||
Transfer of assets from held for sale to held for investment | $ | 64.9 | $ | 18.0 | $ | 11.0 |
lease, these are marked to the lower of cost or fair value and classified as AHFS. Depreciation is stopped on these assets and any further marks to lower of cost or fair value are recorded in Other Income. Equipment received at the end of the lease is marked to the lower of cost or fair value with the adjustment recorded in Other Income.
identification basis, and interest and dividend income on AFS securities is included inInterest and dividends on interest bearing deposits and investments.
- | the length of time that fair value has been below cost; |
- | the severity of the impairment or the extent to which fair value has been below cost; |
- | the cause of the impairment and the financial condition and the near-term prospects of the issuer; |
- | activity in the market of the issuer that may indicate adverse credit conditions; and |
- | the Company’s ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery. |
- | analysis of individual investments that have fair values less than amortized cost, including consideration of the length of time the investment has been in an unrealized loss position and the expected recovery period; |
- | discussion of evidential matter, including an evaluation of factors or triggers that could cause individual investments to qualify as having OTTI and those that would not support OTTI; and |
- | documentation of the results of these analyses, as required under business policies. |
and requires disclosures about fair value measurements. The Company categorizes its financial instruments, based on the priority of inputs to the valuation techniques, according to the following three-tier fair value hierarchy:
- | Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that are accessible at the measurement date. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market, as well as certain other securities that are highly liquid and are actively traded in over-the-counter markets; |
- | Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes derivative contracts and certain loans held-for-sale; |
- | Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using valuation models, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. This category generally includes highly structured or long-term derivative contracts and structured finance securities where independent pricing information cannot be obtained for a significant portion of the underlying assets or liabilities. |
estimates and use more judgment than they do under current GAAP. The five-step analysis of transactions, to determine when and how revenue is recognized, includes:
1. | Identify the contract with the customer. |
2. | Identify the performance obligations in the contract. |
3. | Determine the transaction price. |
4. | Allocate the transaction price to the performance obligations. |
5. | Recognize revenue when or as each performance obligation is satisfied. |
1. | Entities must perform a going concern assessment by evaluating their ability to meet their obligations for a look-forward period of one year from the financial statement issuance date (or date the financial statements are available to be issued). |
2. | Disclosures are required if it is probable an entity will be unable to meet its obligations within the look-forward period. Incremental substantial doubt disclosure is required if the probability is not mitigated by management’s plans. |
3. | Pursuant to the ASU, substantial doubt about an entity’s ability to continue as a going concern exists if it is probable that the entity will be unable to meet its obligations as they become due within one year after the date the annual or interim financial statements are issued or available to be issued (assessment date). |
December 31, 2014 | December 31, 2013 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Assets: | ||||||||||
Assets held for sale | $ | – | $ | 3,374.5 | ||||||
Cash | – | 94.5 | ||||||||
Other assets | – | 352.4 | ||||||||
Total assets | $ | – | $ | 3,821.4 | ||||||
Liabilities: | ||||||||||
Long-term borrowings (secured) | $ | – | $ | 3,265.6 | ||||||
Other liabilities | – | 12.0 | ||||||||
Total Liabilities | $ | – | $ | 3,277.6 |
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Interest income | $ | 27.0 | $ | 130.7 | $ | 178.3 | |||||||||
Interest expense | (248.2 | ) | (77.2 | ) | (231.8 | ) | |||||||||
Other income | (2.1 | ) | 0.9 | 38.3 | ) | ||||||||||
Operating expenses | (3.6 | ) | (14.5 | ) | (24.2 | ) | |||||||||
Income (loss) from discontinued operation before provision for income taxes | (226.9 | ) | 39.9 | (39.4 | ) | ||||||||||
Provision for income taxes | (3.4 | ) | (8.6 | ) | (17.1 | ) | |||||||||
Income (loss) from discontinued operation, net of taxes | (230.3 | ) | 31.3 | (56.5 | ) | ||||||||||
Gain on sale of discontinued operation | 282.8 | – | – | ||||||||||||
Income (loss) from discontinued operation, net of taxes | $ | 52.5 | $ | 31.3 | $ | (56.5 | ) |
December 31, 2014 | December 31, 2013 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Loans | $ | 14,398.2 | $ | 13,814.3 | ||||||
Direct financing leases and leveraged leases | 5,096.8 | 4,814.9 | ||||||||
Finance receivables | 19,495.0 | 18,629.2 | ||||||||
Finance receivables held for sale | 779.9 | 794.3 | ||||||||
Finance receivables and held for sale receivables(1) | $ | 20,274.9 | $ | 19,423.5 |
(1) | Assets held for sale on the Balance Sheet includes finance receivables and operating lease equipment. As discussed in subsequent tables, since the Company manages the credit risk and collections of finance receivables held for sale consistently with its finance receivables held for investment, the aggregate amount is presented in this table. |
December 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Domestic | Foreign | Total | Domestic | Foreign | Total | ||||||||||||||||||||||
Transportation & International Finance | $ | 812.6 | $ | 2,746.3 | $ | 3,558.9 | $ | 666.6 | $ | 2,827.8 | $ | 3,494.4 | |||||||||||||||
North American Commercial Finance | 14,645.1 | 1,290.9 | 15,936.0 | 13,196.7 | 1,496.4 | 14,693.1 | |||||||||||||||||||||
Non-Strategic Portfolios | – | 0.1 | 0.1 | 117.9 | 323.8 | 441.7 | |||||||||||||||||||||
Total | $ | 15,457.7 | $ | 4,037.3 | $ | 19,495.0 | $ | 13,981.2 | $ | 4,648.0 | $ | 18,629.2 |
December 31, 2014 | December 31, 2013 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Unearned income | $ | (869.6 | ) | $ | (942.0 | ) | ||||
Equipment residual values | 684.2 | 669.2 | ||||||||
Unamortized (discounts) | (22.0 | ) | (47.9 | ) | ||||||
Net unamortized deferred costs and (fees) | 48.5 | 49.7 | ||||||||
Leveraged lease third party non-recourse debt payable | (180.5 | ) | (203.8 | ) |
- | Pass – finance receivables in this category do not meet the criteria for classification in one of the categories below. |
- | Special mention – a special mention asset exhibits potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may, at some future date, result in the deterioration of the repayment prospects. |
- | Classified – a classified asset ranges from: (1) assets that exhibit a well-defined weakness and are inadequately protected by the current sound worth and paying capacity of the borrower, and are characterized by the distinct possibility that some loss will be sustained if the deficiencies are not corrected to (2) assets with weaknesses that make collection or liquidation in full unlikely on the basis of current facts, conditions, and values. Assets in this classification can be accruing or on non-accrual depending on the evaluation of these factors. |
Transportation & International Finance | North American Commercial Finance | ||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Grade: | Transportation Finance | International Finance | Corporate Finance | Equipment Finance | Real Estate Finance | Commercial Services | Subtotal | Non- Strategic Portfolios | Total | ||||||||||||||||||||||||||||||
December 31, 2014 | |||||||||||||||||||||||||||||||||||||||
Pass | $ | 2,895.9 | $ | 820.2 | $ | 6,199.0 | $ | 4,129.1 | $ | 1,692.0 | $ | 2,084.1 | $ | 17,820.3 | $ | 288.7 | $ | 18,109.0 | |||||||||||||||||||||
Special mention | 12.8 | 107.9 | 561.0 | 337.8 | 76.6 | 278.8 | 1,374.9 | 18.4 | 1,393.3 | ||||||||||||||||||||||||||||||
Classified – accruing | 44.1 | 58.0 | 121.8 | 180.4 | – | 197.3 | 601.6 | 10.5 | 612.1 | ||||||||||||||||||||||||||||||
Classified – non-accrual | 0.1 | 37.1 | 30.9 | 70.0 | – | – | 138.1 | 22.4 | 160.5 | ||||||||||||||||||||||||||||||
Total | $ | 2,952.9 | $ | 1,023.2 | $ | 6,912.7 | $ | 4,717.3 | $ | 1,768.6 | $ | 2,560.2 | $ | 19,934.9 | $ | 340.0 | $ | 20,274.9 | |||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||||||||||||||||
Pass | $ | 1,627.4 | $ | 1,530.3 | $ | 5,783.1 | $ | 3,355.2 | $ | 1,554.8 | $ | 1,804.6 | $ | 15,655.4 | $ | 685.5 | $ | 16,340.9 | |||||||||||||||||||||
Special mention | 28.6 | 145.8 | 769.5 | 363.5 | – | 314.7 | 1,622.1 | 350.1 | 1,972.2 | ||||||||||||||||||||||||||||||
Classified – accruing | 97.2 | 36.2 | 233.6 | 266.0 | – | 138.9 | 771.9 | 97.8 | 869.7 | ||||||||||||||||||||||||||||||
Classified – non-accrual | 14.3 | 21.0 | 83.8 | 59.4 | – | 4.2 | 182.7 | 58.0 | 240.7 | ||||||||||||||||||||||||||||||
Total | $ | 1,767.5 | $ | 1,733.3 | $ | 6,870.0 | $ | 4,044.1 | $ | 1,554.8 | $ | 2,262.4 | $ | 18,232.1 | $ | 1,191.4 | $ | 19,423.5 |
30–59 Days Past Due | 60–89 Days Past Due | 90 Days or Greater | Total Past Due | Current | Total Finance Receivables | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2014 | |||||||||||||||||||||||||||
Transportation Finance | $ | 5.2 | $ | 1.9 | $ | 4.3 | $ | 11.4 | $ | 2,941.5 | $ | 2,952.9 | |||||||||||||||
International Finance | 43.9 | 7.0 | 21.6 | 72.5 | 950.7 | 1,023.2 | |||||||||||||||||||||
Corporate Finance | 4.4 | – | 0.5 | 4.9 | 6,907.8 | 6,912.7 | |||||||||||||||||||||
Equipment Finance | 93.7 | 32.9 | 14.9 | 141.5 | 4,575.8 | 4,717.3 | |||||||||||||||||||||
Real Estate Finance | – | – | – | – | 1,768.6 | 1,768.6 | |||||||||||||||||||||
Commercial Services | 62.2 | 3.3 | 0.9 | 66.4 | 2,493.8 | 2,560.2 | |||||||||||||||||||||
Sub-total | 209.4 | 45.1 | 42.2 | 296.7 | 19,638.2 | 19,934.9 | |||||||||||||||||||||
Non-Strategic Portfolios | 16.4 | 6.9 | 9.6 | 32.9 | 307.1 | 340.0 | |||||||||||||||||||||
Total | $ | 225.8 | $ | 52.0 | $ | 51.8 | $ | 329.6 | $ | 19,945.3 | $ | 20,274.9 | |||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||||
Transportation Finance | $ | 18.3 | $ | 0.9 | $ | 0.5 | $ | 19.7 | $ | 1,747.8 | $ | 1,767.5 | |||||||||||||||
International Finance | 30.6 | 11.6 | 12.6 | 54.8 | 1,678.5 | 1,733.3 | |||||||||||||||||||||
Corporate Finance | – | – | 17.8 | 17.8 | 6,852.2 | 6,870.0 | |||||||||||||||||||||
Equipment Finance | 116.6 | 30.0 | 18.6 | 165.2 | 3,878.9 | 4,044.1 | |||||||||||||||||||||
Real Estate Finance | – | – | – | – | 1,554.8 | 1,554.8 | |||||||||||||||||||||
Commercial Services | 47.9 | 2.4 | 1.0 | 51.3 | 2,211.1 | 2,262.4 | |||||||||||||||||||||
Sub-total | 213.4 | 44.9 | 50.5 | 308.8 | 17,923.3 | 18,232.1 | |||||||||||||||||||||
Non-Strategic Portfolios | 29.7 | 7.9 | 16.2 | 53.8 | 1,137.6 | 1,191.4 | |||||||||||||||||||||
Total | $ | 243.1 | $ | 52.8 | $ | 66.7 | $ | 362.6 | $ | 19,060.9 | $ | 19,423.5 |
December 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Held for Investment | Held for Sale | Total | Held for Investment | Held for Sale | Total | ||||||||||||||||||||||
Transportation Finance | $ | 0.1 | $ | – | $ | 0.1 | $ | 14.3 | $ | – | $ | 14.3 | |||||||||||||||
International Finance | 22.4 | 14.7 | 37.1 | 21.0 | – | 21.0 | |||||||||||||||||||||
Corporate Finance | 30.9 | – | 30.9 | 83.5 | 0.3 | 83.8 | |||||||||||||||||||||
Equipment Finance | 70.0 | – | 70.0 | 59.4 | – | 59.4 | |||||||||||||||||||||
Commercial Services | – | – | – | 4.2 | – | 4.2 | |||||||||||||||||||||
Sub-total | 123.4 | 14.7 | 138.1 | 182.4 | 0.3 | 182.7 | |||||||||||||||||||||
Non-Strategic Portfolios | – | 22.4 | 22.4 | 17.6 | 40.4 | 58.0 | |||||||||||||||||||||
Total | $ | 123.4 | $ | 37.1 | $ | 160.5 | $ | 200.0 | $ | 40.7 | $ | 240.7 | |||||||||||||||
Repossessed assets | 0.8 | 7.0 | |||||||||||||||||||||||||
Total non-performing assets | $ | 161.3 | $ | 247.7 | |||||||||||||||||||||||
Total Accruing loans past due 90 days or more | $ | 10.3 | $ | 9.9 |
December 31, 2014 | Recorded Investment | Unpaid Principal Balance | Related Allowance | Average Recorded Investment | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
With no related allowance recorded: | |||||||||||||||||||
International Finance | $ | 10.2 | $ | 17.0 | $ | – | $ | 10.1 | |||||||||||
Corporate Finance | 1.2 | 1.2 | – | 104.9 | |||||||||||||||
Equipment Finance | 5.6 | 6.8 | – | 5.8 | |||||||||||||||
Commercial Services | 4.2 | 4.2 | – | 6.9 | |||||||||||||||
Non-Strategic Portfolios | – | – | – | 3.4 | |||||||||||||||
With an allowance recorded: | |||||||||||||||||||
Transportation Finance | – | – | – | 9.0 | |||||||||||||||
International Finance | 6.0 | 6.0 | 1.0 | 3.4 | |||||||||||||||
Corporate Finance | 29.6 | 34.3 | 11.4 | 43.5 | |||||||||||||||
Equipment Finance | – | – | – | 0.8 | |||||||||||||||
Commercial Services | – | – | – | 2.8 | |||||||||||||||
Total Impaired Loans(1) | 56.8 | 69.5 | 12.4 | 190.6 | |||||||||||||||
Total Loans Impaired at Convenience Date(2) | 1.2 | 15.8 | 0.5 | 26.4 | |||||||||||||||
Total | $ | 58.0 | $ | 85.3 | $ | 12.9 | $ | 217.0 |
December 31, 2013 | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
With no related allowance recorded: | ||||||||||||||||||||
Transportation Finance | $ | – | $ | – | $ | – | $ | 2.2 | ||||||||||||
International Finance | 6.9 | 24.5 | – | 6.9 | ||||||||||||||||
Corporate Finance | 136.1 | 150.1 | – | 152.8 | ||||||||||||||||
Equipment Finance | 5.8 | 7.9 | – | 7.0 | ||||||||||||||||
Commercial Services | 9.1 | 9.1 | – | 10.0 | ||||||||||||||||
Non-Strategic Portfolios | 10.2 | 12.5 | – | 24.0 | ||||||||||||||||
With an allowance recorded: | ||||||||||||||||||||
Transportation Finance | 14.3 | 14.3 | 0.6 | 12.4 | ||||||||||||||||
Corporate Finance | 50.6 | 51.7 | 28.8 | 79.7 | ||||||||||||||||
Commercial Services | 4.2 | 4.2 | 1.0 | 4.6 | ||||||||||||||||
Non-Strategic Portfolios | – | – | – | 1.0 | ||||||||||||||||
Total Impaired Loans(3) | 237.2 | 274.3 | 30.4 | 300.6 | ||||||||||||||||
Total Loans Impaired at Convenience Date(4) | 54.1 | 95.8 | 1.0 | 77.9 | ||||||||||||||||
Total | $ | 291.3 | $ | 370.1 | $ | 31.4 | $ | 378.5 |
(1) | Interest income recorded for the year ended December 31, 2014 while the loans were impaired was $10.1 million of which $0.7 million was interest recognized using cash-basis method of accounting. |
(2) | Details of finance receivables that were identified as impaired at the Convenience Date are presented under Loans and Debt Securities Acquired with Deteriorated Credit Quality. |
(3) | Interest income recorded for the year ended December 31, 2013 while the loans were impaired was $17.7 million of which $3.5 million was interest recognized using the cash-basis method of accounting. |
(4) | Details of finance receivables that were identified as impaired at the Convenience Date are presented under Loans and Debt Securities Acquired with Deteriorated Credit Quality. |
- | Instances where the primary source of payment is no longer sufficient to repay the loan in accordance with terms of the loan document; |
- | Lack of current financial data related to the borrower or guarantor; |
- | Delinquency status of the loan; |
- | Borrowers experiencing problems, such as operating losses, marginal working capital, inadequate cash flow, excessive financial leverage or business interruptions; |
- | Loans secured by collateral that is not readily marketable or that has experienced or is susceptible to deterioration in realizable value; and |
- | Loans to borrowers in industries or countries experiencing severe economic instability. |
- | ”Orderly liquidation value“ is the basis for collateral valuation; |
- | Appraisals are updated annually or more often as market conditions warrant; and |
- | Appraisal values are discounted in the determination of impairment if the: |
- | appraisal does not reflect current market conditions; or |
- | collateral consists of inventory, accounts receivable, or other forms of collateral that may become difficult to locate, collect or subject to pilferage in a liquidation. |
- | Borrower is in default with CIT or other material creditor |
- | Borrower has declared bankruptcy |
- | Growing doubt about the borrower’s ability to continue as a going concern |
- | Borrower has (or is expected to have) insufficient cash flow to service debt |
- | Borrower is de-listing securities |
- | Borrower’s inability to obtain funds from other sources |
- | Breach of financial covenants by the borrower. |
- | Assets used to satisfy debt are less than CIT’s recorded investment in the receivable |
- | Modification of terms – interest rate changed to below market rate |
- | Maturity date extension at an interest rate less than market rate |
- | The borrower does not otherwise have access to funding for debt with similar risk characteristics in the market at the restructured rate and terms |
- | Capitalization of interest |
- | Increase in interest reserves |
- | Conversion of credit to Payment-In-Kind (PIK) |
- | Delaying principal and/or interest for a period of three months or more |
- | Partial forgiveness of the balance. |
- | The nature of modifications qualifying as TDR’s based upon recorded investment at December 31, 2014 and 2013 was comprised of payment deferrals for 35% and 88%, covenant relief for 65% and 11%, and interest rate reductions and debt forgiveness for 0% and 1%; |
- | 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. Additionally, in some instances, modifications improve the Company’s economic return through increased interest rates and fees, but are reported as TDRs due to assessments regarding the borrowers’ ability to independently obtain similar funding in the market and assessments of the relationship between modified rates and terms and comparable market rates and terms. The weighted average change in interest rates for all TDRs occurring during the years ended December 31, 2014 and 2013 was not significant; |
- | 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 2014 and 2013 totaled $0 million and $12.2 million, respectively, as debt forgiveness is a relatively small component of the Company’s modification programs; and |
- | 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. |
2014 | |||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Transportation & International Finance | North American Commercial Finance | Non-Strategic Portfolios | Corporate and Other | Total | |||||||||||||||||||||||||||
Beginning balance | $ | 46.7 | $ | 303.8 | $ | 5.6 | $ | – | $ | 356.1 | |||||||||||||||||||||
Provision for credit losses | 38.3 | 62.0 | (0.4 | ) | 0.2 | 100.1 | |||||||||||||||||||||||||
Other(1) | (0.5 | ) | (10.0 | ) | – | (0.2 | ) | (10.7 | ) | ||||||||||||||||||||||
Gross charge-offs(2) | (44.8 | ) | (75.2 | ) | (7.5 | ) | – | (127.5 | ) | ||||||||||||||||||||||
Recoveries | 7.1 | 19.0 | 2.3 | – | 28.4 | ||||||||||||||||||||||||||
Allowance balance – end of period | $ | 46.8 | $ | 299.6 | $ | – | $ | – | $ | 346.4 | |||||||||||||||||||||
Allowance balance: | |||||||||||||||||||||||||||||||
Loans individually evaluated for impairment | $ | 1.0 | $ | 11.4 | $ | – | $ | – | 12.4 | ||||||||||||||||||||||
Loans collectively evaluated for impairment | 45.8 | 287.7 | – | – | 333.5 | ||||||||||||||||||||||||||
Loans acquired with deteriorated credit quality(3) | – | 0.5 | – | – | 0.5 | ||||||||||||||||||||||||||
Allowance balance – end of period | $ | 46.8 | $ | 299.6 | $ | – | $ | – | $ | 346.4 | |||||||||||||||||||||
Other reserves(1) | $ | 0.3 | $ | 35.1 | $ | – | $ | – | $ | 35.4 | |||||||||||||||||||||
Finance receivables: | |||||||||||||||||||||||||||||||
Loans individually evaluated for impairment | $ | 17.6 | $ | 40.6 | $ | – | $ | – | 58.2 | ||||||||||||||||||||||
Loans collectively evaluated for impairment | 3,541.3 | 15,894.2 | 0.1 | – | 19,435.6 | ||||||||||||||||||||||||||
Loans acquired with deteriorated credit quality(3) | – | 1.2 | – | – | 1.2 | ||||||||||||||||||||||||||
Ending balance | $ | 3,558.9 | $ | 15,936.0 | $ | 0.1 | $ | – | $ | 19,495.0 | |||||||||||||||||||||
Percent of loans to total loans | 18.3 | % | 81.7 | % | – | – | 100.0 | % | |||||||||||||||||||||||
2013 | |||||||||||||||||||||||||||||||
Beginning balance | $ | 44.3 | $ | 293.7 | $ | 41.3 | $ | – | $ | 379.3 | |||||||||||||||||||||
Provision for credit losses | 18.7 | 35.5 | 10.8 | (0.1 | ) | 64.9 | |||||||||||||||||||||||||
Other(1) | 0.6 | (6.9 | ) | (1.2 | ) | 0.1 | (7.4 | ) | |||||||||||||||||||||||
Gross charge-offs(2) | (26.0 | ) | (58.3 | ) | (54.3 | ) | – | (138.6 | ) | ||||||||||||||||||||||
Recoveries | 9.1 | 39.8 | 9.0 | – | 57.9 | ||||||||||||||||||||||||||
Allowance balance – end of period | $ | 46.7 | $ | 303.8 | $ | 5.6 | $ | – | $ | 356.1 | |||||||||||||||||||||
Allowance balance: | |||||||||||||||||||||||||||||||
Loans individually evaluated for impairment | $ | 0.6 | $ | 29.8 | $ | – | $ | – | $ | 30.4 | |||||||||||||||||||||
Loans collectively evaluated for impairment | 46.1 | 273.0 | 5.6 | – | 324.7 | ||||||||||||||||||||||||||
Loans acquired with deteriorated credit quality(3) | – | 1.0 | – | – | 1.0 | ||||||||||||||||||||||||||
Allowance balance – end of period | $ | 46.7 | $ | 303.8 | $ | 5.6 | $ | – | $ | 356.1 | |||||||||||||||||||||
Other reserves(1) | $ | 0.2 | $ | 27.6 | $ | – | $ | – | $ | 27.8 | |||||||||||||||||||||
Finance receivables: | |||||||||||||||||||||||||||||||
Loans individually evaluated for impairment | $ | 21.2 | $ | 205.8 | $ | 10.2 | $ | – | $ | 237.2 | |||||||||||||||||||||
Loans collectively evaluated for impairment | 3,473.1 | 14,435.1 | 429.7 | – | 18,337.9 | ||||||||||||||||||||||||||
Loans acquired with deteriorated credit quality(3) | 0.1 | 52.2 | 1.8 | – | 54.1 | ||||||||||||||||||||||||||
Ending balance | $ | 3,494.4 | $ | 14,693.1 | $ | 441.7 | $ | – | $ | 18,629.2 | |||||||||||||||||||||
Percent of loans to total loans | 18.7 | % | 78.9 | % | 2.4 | % | – | 100.0 | % |
(1) | “Other reserves” represents additional credit loss reserves for unfunded lending commitments, letters of credit and for deferred purchase agreements, all of which is recorded in Other Liabilities. “Other” also includes changes relating to sales and foreign currency translations. |
(2) | Gross charge-offs included $13 million and $18 million charged directly to the Allowance for loan losses for the years ended December 31, 2014 and December 31, 2013, respectively. In 2014, $13 million related to NACF. In 2013, $16 million related to NACF and $2 million to NSP. |
(3) | Represents loans considered impaired in FSA and are accounted for under the guidance in ASC 310-30 (Loans and Debt Securities Acquired with Deteriorated Credit Quality). |
December 31, 2014 | December 31, 2013 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Commercial aircraft (including regional aircraft) | $ | 8,890.1 | $ | 8,229.1 | ||||||
Railcars and locomotives | 5,714.0 | 4,500.1 | ||||||||
Other equipment | 326.3 | 306.2 | ||||||||
Total(1) | $ | 14,930.4 | $ | 13,035.4 |
(1) | Includes equipment off-lease of $183.2 million and $144.7 million at December 31, 2014 and 2013, respectively, primarily consisting of rail and aerospace assets. |
2015 | $ | 1,923.0 | ||||
2016 | 1,672.8 | |||||
2017 | 1,381.2 | |||||
2018 | 1,093.3 | |||||
2019 | 822.0 | |||||
Thereafter | 2,431.9 | |||||
Total | $ | 9,324.2 |
December 31, 2014 | December 31, 2013 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Debt securities available-for-sale | $ | 1,116.5 | $ | 1,487.8 | ||||||
Equity securities available-for-sale | 14.0 | 13.7 | ||||||||
Debt securities held-to-maturity(1) | 352.3 | 1,042.3 | ||||||||
Non-marketable equity investments(2) | 67.5 | 86.9 | ||||||||
Total investment securities | $ | 1,550.3 | $ | 2,630.7 |
(1) | Recorded at amortized cost less impairment on securities that have credit-related impairment. |
(2) | Non-marketable equity investments include ownership interests greater than 3% in limited partnership investments that are accounted for under the equity method. Non-marketable equity investments include $19.7 million and $23.6 million in limited partnerships at December 31, 2014 and 2013, respectively, accounted for under the equity method. The remaining investments are carried at cost and include qualified Community Reinvestment Act (CRA) investments, equity fund holdings and shares issued by customers during loan work out situations or as part of an original loan investment. |
Year Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Interest income – interest bearing deposits | $ | 17.7 | $ | 16.6 | $ | 21.7 | |||||||||
Interest income – investments/reverse repos | 14.1 | 8.9 | 7.8 | ||||||||||||
Dividends – investments | 3.7 | 3.4 | 2.7 | ||||||||||||
Total interest and dividends | $ | 35.5 | $ | 28.9 | $ | 32.2 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2014 | |||||||||||||||||||
Debt securities AFS | |||||||||||||||||||
U.S. Treasury Securities | $ | 200.0 | $ | – | $ | – | $ | 200.0 | |||||||||||
U.S. government agency obligations | 904.2 | – | – | 904.2 | |||||||||||||||
Supranational and foreign government securities | 12.3 | – | – | 12.3 | |||||||||||||||
Total debt securities AFS | 1,116.5 | – | – | 1,116.5 | |||||||||||||||
Equity securities AFS | 14.0 | 0.6 | (0.6 | ) | 14.0 | ||||||||||||||
Total securities AFS | $ | 1,130.5 | $ | 0.6 | $ | (0.6 | ) | $ | 1,130.5 | ||||||||||
December 31, 2013 | |||||||||||||||||||
Debt securities AFS | |||||||||||||||||||
U.S. Treasury Securities | $ | 649.1 | $ | – | $ | – | $ | 649.1 | |||||||||||
U.S. government agency obligations | 711.9 | – | – | 711.9 | |||||||||||||||
Supranational and foreign government securities | 126.8 | – | – | 126.8 | |||||||||||||||
Total debt securities AFS | 1,487.8 | – | – | 1,487.8 | |||||||||||||||
Equity securities AFS | 13.5 | 0.4 | (0.2 | ) | 13.7 | ||||||||||||||
Total securities AFS | $ | 1,501.3 | $ | 0.4 | $ | (0.2 | ) | $ | 1,501.5 |
Carrying Value | Gross Unrecognized Gains | Gross Unrecognized Losses | Fair Value | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2014 | |||||||||||||||||||
Mortgage-backed securities | |||||||||||||||||||
U.S. government owned and sponsored agencies | $ | 156.3 | $ | 2.5 | $ | (1.9 | ) | $ | 156.9 | ||||||||||
State and municipal | 48.1 | 0.1 | (1.8 | ) | 46.4 | ||||||||||||||
Foreign government | 37.9 | 0.1 | – | 38.0 | |||||||||||||||
Corporate – Foreign | 110.0 | 9.0 | – | 119.0 | |||||||||||||||
Total debt securities held-to-maturity | $ | 352.3 | $ | 11.7 | $ | (3.7 | ) | $ | 360.3 | ||||||||||
December 31, 2013 | |||||||||||||||||||
U.S. government agency obligations | $ | 735.5 | $ | 0.1 | $ | – | $ | 735.6 | |||||||||||
Mortgage-backed securities | |||||||||||||||||||
U.S. government owned and sponsored agencies | 96.3 | 1.7 | (5.8 | ) | 92.2 | ||||||||||||||
State and municipal | 57.4 | – | (6.5 | ) | 50.9 | ||||||||||||||
Foreign government | 38.3 | – | – | 38.3 | |||||||||||||||
Corporate – Foreign | 114.8 | 9.0 | – | 123.8 | |||||||||||||||
Total debt securities held-to-maturity | $ | 1,042.3 | $ | 10.8 | $ | (12.3 | ) | $ | 1,040.8 |
December 31, 2014 | December 31, 2013 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Carrying Cost | Fair Value | Carrying Cost | Fair Value | ||||||||||||||||
U.S. government agency obligations | |||||||||||||||||||
Total — Due within 1 year | $ | – | $ | – | $ | 735.5 | $ | 735.6 | |||||||||||
Mortgage-backed securities | |||||||||||||||||||
U.S. government owned and sponsored agencies | |||||||||||||||||||
Due after 5 but within 10 years | 1.3 | 1.3 | – | – | |||||||||||||||
Due after 10 years(1) | 155.0 | 155.6 | 96.3 | 92.2 | |||||||||||||||
Total | 156.3 | 156.9 | 96.3 | 92.2 | |||||||||||||||
State and municipal | |||||||||||||||||||
Due within 1 year | 1.2 | 1.2 | 0.7 | 0.7 | |||||||||||||||
Due after 1 but within 5 years | 2.9 | 2.9 | 4.4 | 4.4 | |||||||||||||||
Due after 5 but within 10 years | – | – | 0.7 | 0.7 | |||||||||||||||
Due after 10 years(1) | 44.0 | 42.3 | 51.6 | 45.1 | |||||||||||||||
Total | 48.1 | 46.4 | 57.4 | 50.9 | |||||||||||||||
Foreign government | |||||||||||||||||||
Due within 1 year | 10.8 | 10.8 | 29.8 | 29.8 | |||||||||||||||
Due after 1 but within 5 years | 27.1 | 27.2 | 8.5 | 8.5 | |||||||||||||||
Total | 37.9 | 38.0 | 38.3 | 38.3 | |||||||||||||||
Corporate – Foreign | |||||||||||||||||||
Due within 1 year | 0.9 | 0.9 | 0.8 | 0.8 | |||||||||||||||
Due after 1 but within 5 years | 43.7 | 49.8 | 48.6 | 56.1 | |||||||||||||||
Due after 5 but within 10 years | 65.4 | 68.3 | 65.4 | 66.9 | |||||||||||||||
Total | 110.0 | 119.0 | 114.8 | 123.8 | |||||||||||||||
Total debt securities held-to-maturity | $ | 352.3 | $ | 360.3 | $ | 1,042.3 | $ | 1,040.8 |
(1) | Investments with no stated maturities are included as contractual maturities of greater than 10 years. Actual maturities may differ due to call or prepayment rights. |
December 31, 2014 | December 31, 2013 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Deposits on commercial aerospace equipment | $ | 736.3 | $ | 831.3 | ||||||
Deferred federal and state tax assets | 422.5 | 40.0 | ||||||||
Fair value of derivative financial instruments | 168.0 | 50.3 | ||||||||
Deferred debt costs and other deferred charges | 148.1 | 158.5 | ||||||||
Furniture and fixtures | 126.4 | 85.3 | ||||||||
Tax receivables, other than income taxes | 102.0 | 132.2 | ||||||||
Executive retirement plan and deferred compensation | 96.7 | 101.3 | ||||||||
Other(1) | 332.4 | 295.2 | ||||||||
Total other assets | $ | 2,132.4 | $ | 1,694.1 |
(1) | Other includes items such as: accrued interest/dividends, fixed assets, prepaid expenses, investments in and receivables from non-consolidated entities, and other miscellaneous assets. |
December 31, 2014 | December 31, 2013 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Deposits Outstanding | $ | 15,849.8 | $ | 12,526.5 | ||||||
Weighted average contractual interest rate | 1.69 | % | 1.65 | % | ||||||
Weighted average remaining number of days to maturity(1) | 1,247 | days | 1,014 | days | ||||||
Contractual Maturities and Rates | ||||||||||
Due in 2015–(1.16%)(2) | $ | 6,988.4 | ||||||||
Due in 2016–(1.66%) | 1,670.6 | |||||||||
Due in 2017–(1.41%) | 2,398.2 | |||||||||
Due in 2018–(1.85%) | 928.2 | |||||||||
Due in 2019–(2.45%) | 1,670.7 | |||||||||
Due after 2019–(3.06%) | 2,195.1 | |||||||||
Deposits outstanding, excluding fresh start adjustments | $ | 15,851.2 |
(1) | Excludes deposit balances with no stated maturity. |
(2) | Includes rates on deposit accounts with no stated maturity. |
Years Ended December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | ||||||||||
Daily average deposits | $ | 13,925.4 | $ | 11,254.3 | |||||||
Maximum amount outstanding | $ | 15,851.2 | $ | 12,605.3 | |||||||
Weighted average contractual interest rate for the year | 1.59 | % | 1.56 | % |
At December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | ||||||||||
U.S. certificates of deposits | |||||||||||
Three months or less | $ | 340.9 | $ | 317.7 | |||||||
After three months through six months | 330.8 | 258.1 | |||||||||
After six months through twelve months | 757.8 | 601.7 | |||||||||
After twelve months | 2,590.3 | 1,501.9 | |||||||||
Total U.S. certificates of deposits | $ | 4,019.8 | $ | 2,679.4 | |||||||
Non-U.S. certificates of deposits | $ | 57.0 | $ | 88.3 |
(dollars in millions) | December 31, 2014 | December 31, 2013 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
CIT Group Inc. | Subsidiaries | Total | Total | ||||||||||||||||
Senior unsecured(1) | $ | 11,932.4 | $ | – | $ | 11,932.4 | $ | 12,531.6 | |||||||||||
Secured borrowings | – | 6,523.4 | 6,523.4 | 5,952.9 | |||||||||||||||
Total Long-term Borrowings | $ | 11,932.4 | $ | 6,523.4 | $ | 18,455.8 | $ | 18,484.5 |
(1) | Senior Unsecured Notes at December 31, 2014 were comprised of $8,243.5 million of Unsecured Notes, $3,650.0 million of Series C Notes and $38.9 million of other unsecured debt. |
2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | Contractual Maturities | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Senior unsecured | $ | 1,200.0 | $ | – | $ | 3,000.0 | $ | 2,200.0 | $ | 2,750.0 | $ | 2,801.4 | $ | 11,951.4 | ||||||||||||||||
Secured borrowings | 1,853.3 | 1,125.8 | 893.2 | 626.1 | 466.8 | 1,548.8 | 6,514.0 | |||||||||||||||||||||||
$ | 3,053.3 | $ | 1,125.8 | $ | 3,893.2 | $ | 2,826.1 | $ | 3,216.8 | $ | 4,350.2 | $ | 18,465.4 |
Maturity Date | Rate (%) | Date of Issuance | Par Value | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
February 2015* | 4.750 | % | February 2012 | 1,200.0 | ||||||||||
May 2017 | 5.000 | % | May 2012 | 1,250.0 | ||||||||||
August 2017 | 4.250 | % | August 2012 | 1,750.0 | ||||||||||
March 2018 | 5.250 | % | March 2012 | 1,500.0 | ||||||||||
April 2018* | 6.625 | % | March 2011 | 700.0 | ||||||||||
February 2019* | 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 and total | 4.99 | % | $ | 11,900.0 |
* | Series C Unsecured Notes |
December 31, 2014 | December 31, 2013 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Secured Borrowing | Pledged Assets | Secured Borrowing | Pledged Assets | ||||||||||||||||
Rail(3) | $ | 1,179.7 | $ | 1,575.7 | $ | 931.0 | $ | 1,163.1 | |||||||||||
Aerospace(3) | 2,411.7 | 3,914.4 | 2,366.1 | 4,126.7 | |||||||||||||||
International Finance | 545.0 | 730.6 | 583.5 | 748.1 | |||||||||||||||
Subtotal – Transportation & International Finance | 4,136.4 | 6,220.7 | 3,880.6 | 6,037.9 | |||||||||||||||
Corporate Finance | 129.7 | 141.6 | 320.2 | 447.4 | |||||||||||||||
Commercial Services | 334.7 | 1,644.6 | 334.7 | 1,453.2 | |||||||||||||||
Equipment Finance | 1,797.6 | 2,352.8 | 1,227.3 | 1,499.7 | |||||||||||||||
Real Estate Finance | 125.0 | 168.0 | – | – | |||||||||||||||
Subtotal – North American Commercial Finance | 2,387.0 | 4,307.0 | 1,882.2 | 3,400.3 | |||||||||||||||
Small Business Loan – Non-Strategic Portfolios | – | – | 190.1 | 220.1 | |||||||||||||||
Total | $ | 6,523.4 | $ | 10,527.7 | (2) | $ | 5,952.9 | $ | 9,658.3 |
(1) | As part of our liquidity management strategy, the Company pledges assets to secure financing transactions (which include securitizations), and for other purposes as required or permitted by law while CIT Bank also pledges assets to secure borrowings from the FHLB and FRB. |
(2) | At December 31, 2014, we had pledged assets (including collateral for the FRB discount window not in the table above) of $12.3 billion, which included $6.3 billion of loans, $4.8 billion of operating lease equipment (including amounts held for sale), $1.0 billion of cash and $0.2 billion of investment securities. |
(3) | At December 31, 2014, the GSI TRS related borrowings and pledged assets, respectively, of $1.2 billion and $1.8 billion were included in Transportation & International Finance. The GSI TRS is described in Note 11 — Derivative Financial Instruments. |
December 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Notional Amount | Asset Fair Value | Liability Fair Value | Notional Amount(2) | Asset Fair Value | Liability Fair Value | ||||||||||||||||||||||
Qualifying Hedges | |||||||||||||||||||||||||||
Cross currency swaps – net investment hedges | $ | – | $ | – | $ | – | $ | 47.1 | $ | 1.1 | $ | – | |||||||||||||||
Foreign currency forward contracts – cash flow hedges | – | – | – | 3.8 | – | (0.3 | ) | ||||||||||||||||||||
Foreign currency forward contracts – net investment hedges | 1,193.1 | 74.7 | – | 1,436.8 | 11.8 | (23.8 | ) | ||||||||||||||||||||
Total Qualifying Hedges | 1,193.1 | 74.7 | – | 1,487.7 | 12.9 | (24.1 | ) | ||||||||||||||||||||
Non-Qualifying Hedges | |||||||||||||||||||||||||||
Cross currency swaps | – | – | – | 131.8 | 6.3 | – | |||||||||||||||||||||
Interest rate swaps | 1,902.0 | 15.2 | (23.1 | ) | 1,386.0 | 5.7 | (25.4 | ) | |||||||||||||||||||
Written options | 2,711.5 | – | (2.7 | ) | 566.0 | – | (1.0 | ) | |||||||||||||||||||
Purchased options | 948.4 | 0.8 | – | 816.8 | 1.2 | – | |||||||||||||||||||||
Foreign currency forward contracts | 2,028.8 | 77.2 | (12.0 | ) | 1,979.9 | 23.4 | (50.8 | ) | |||||||||||||||||||
Total Return Swap (TRS) | 1,091.9 | – | (24.5 | ) | 485.2 | – | (9.7 | ) | |||||||||||||||||||
Equity Warrants | 1.0 | 0.1 | – | 1.0 | 0.8 | – | |||||||||||||||||||||
Total Non-qualifying Hedges | 8,683.6 | 93.3 | (62.3 | ) | 5,366.7 | 37.4 | (86.9 | ) | |||||||||||||||||||
Total Hedges | $ | 9,876.7 | $ | 168.0 | $ | (62.3 | ) | $ | 6,854.4 | $ | 50.3 | $ | (111.0 | ) |
(1) | Presented on a gross basis. |
- | CIT’s funding costs for similar financings based on current market conditions; |
- | Forecasted usage of the long-dated facilities through the final maturity date in 2028; and |
- | Forecasted amortization, due to principal payments on the underlying ABS, which impacts the amount of the unutilized portion. |
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(1) | Cash Collateral Pledged/ (Received)(1)(2) | Net Amount | ||||||||||||||||||||||
December 31, 2014 | |||||||||||||||||||||||||||
Derivative assets | $ | 168.0 | $ | – | $ | 168.0 | $ | (13.6 | ) | $ | (137.3 | ) | $ | 17.1 | |||||||||||||
Derivative liabilities | (62.3 | ) | – | (62.3 | ) | 13.6 | 8.7 | (40.0 | ) | ||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||||
Derivative assets | $ | 50.3 | $ | – | $ | 50.3 | $ | (33.4 | ) | $ | (5.0 | ) | $ | 11.9 | |||||||||||||
Derivative liabilities | (111.0 | ) | – | (111.0 | ) | 33.4 | 41.0 | (36.6 | ) |
(1) | 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 the 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 by one of the counterparties. |
(2) | Collateral pledged or received is included in Other assets or Other liabilities, respectively. |
Years Ended December 31, | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Contract Type | Gain / (Loss) Recognized | 2014 | 2013 | 2012 | |||||||||||||||
Qualifying Hedges | |||||||||||||||||||
Foreign currency forward contracts – cash flow hedges | Other income | $ | – | $ | 0.7 | $ | 1.1 | ||||||||||||
Total Qualifying Hedges | – | 0.7 | 1.1 | ||||||||||||||||
Non Qualifying Hedges | |||||||||||||||||||
Cross currency swaps | Other income | 4.1 | 11.5 | (10.5 | ) | ||||||||||||||
Interest rate swaps | Other income | 7.2 | 19.1 | 1.2 | |||||||||||||||
Interest rate options | Other income | (2.4 | ) | – | (0.7 | ) | |||||||||||||
Foreign currency forward contracts | Other income | 118.1 | (12.1 | ) | (23.7 | ) | |||||||||||||
Equity warrants | Other income | (0.7 | ) | 0.8 | (0.3 | ) | |||||||||||||
Total Return Swap (TRS) | Other income | (14.8 | ) | (3.9 | ) | (5.8 | ) | ||||||||||||
Total Non-qualifying Hedges | 111.5 | 15.4 | (39.8 | ) | |||||||||||||||
Total derivatives – income statement impact | $ | 111.5 | $ | 16.1 | $ | (38.7 | ) |
Contract Type | Derivatives- effective portion reclassified from AOCI to income | Hedge ineffectiveness recorded directly to income | Total income statement impact | Derivatives- effective portion recorded in OCI | Total change in OCI for period | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Year Ended December 31, 2014 | |||||||||||||||||||||||
Foreign currency forward contracts – cash flow hedges | $ | – | $ | – | $ | – | $ | 0.2 | $ | 0.2 | |||||||||||||
Foreign currency forward contracts – net investment hedges | (18.1 | ) | – | (18.1 | ) | 111.1 | 129.2 | ||||||||||||||||
Cross currency swaps – net investment hedges | – | – | – | 1.1 | 1.1 | ||||||||||||||||||
Total | $ | (18.1 | ) | $ | – | $ | (18.1 | ) | $ | 112.4 | $ | 130.5 | |||||||||||
Year Ended December 31, 2013 | |||||||||||||||||||||||
Foreign currency forward contracts – cash flow hedges | $ | 0.7 | $ | – | $ | 0.7 | $ | 0.6 | $ | (0.1 | ) | ||||||||||||
Foreign currency forward contracts – net investment hedges | (7.7 | ) | – | (7.7 | ) | 5.8 | 13.5 | ||||||||||||||||
Cross currency swaps – net investment hedges | (0.1 | ) | – | (0.1 | ) | 10.0 | 10.1 | ||||||||||||||||
Total | $ | (7.1 | ) | $ | – | $ | (7.1 | ) | $ | 16.4 | $ | 23.5 | |||||||||||
Year Ended December 31, 2012 | |||||||||||||||||||||||
Foreign currency forward contracts – cash flow hedges | $ | 1.1 | $ | – | $ | 1.1 | $ | 1.7 | $ | 0.6 | |||||||||||||
Foreign currency forward contracts – net investment hedges | (4.1 | ) | – | (4.1 | ) | (59.4 | ) | (55.3 | ) | ||||||||||||||
Cross currency swaps – net investment hedges | – | – | – | �� | (12.9 | ) | (12.9 | ) | |||||||||||||||
Total | $ | (3.0 | ) | $ | – | $ | (3.0 | ) | $ | (70.6 | ) | $ | (67.6 | ) |
December 31, 2014 | December 31, 2013 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Equipment maintenance reserves | $ | 960.4 | $ | 904.2 | ||||||
Accrued expenses and accounts payable | 478.3 | 478.1 | ||||||||
Security and other deposits | 368.0 | 227.4 | ||||||||
Current taxes payable and deferred taxes | 319.1 | 179.8 | ||||||||
Accrued interest payable | 243.7 | 247.1 | ||||||||
Valuation adjustment relating to aerospace commitments | 121.2 | 137.5 | ||||||||
Other(1) | 398.1 | 490.2 | ||||||||
Total other liabilities | $ | 2,888.8 | $ | 2,664.3 |
(1) | Other consists of other taxes, property tax liabilities and other miscellaneous liabilities. |
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2014 | ||||||||||||||||||
Assets | ||||||||||||||||||
Debt Securities AFS | $ | 1,116.5 | $ | 212.3 | $ | 904.2 | $ | – | ||||||||||
Equity Securities AFS | 14.0 | 14.0 | – | – | ||||||||||||||
Trading assets at fair value – derivatives | 93.3 | – | 93.3 | – | ||||||||||||||
Derivative counterparty assets at fair value | 74.7 | – | 74.7 | – | ||||||||||||||
Total | $ | 1,298.5 | $ | 226.3 | $ | 1,072.2 | $ | – | ||||||||||
Liabilities | ||||||||||||||||||
Trading liabilities at fair value – derivatives | $ | (62.3 | ) | $ | – | $ | (35.7 | ) | $ | (26.6 | ) | |||||||
Derivative counterparty liabilities at fair value | – | – | – | – | ||||||||||||||
Total | $ | (62.3 | ) | $ | – | $ | (35.7 | ) | $ | (26.6 | ) | |||||||
December 31, 2013 | ||||||||||||||||||
Assets | ||||||||||||||||||
Debt Securities AFS | $ | 1,487.8 | $ | 675.9 | $ | 811.9 | $ | – | ||||||||||
Equity Securities AFS | 13.7 | 13.7 | – | – | ||||||||||||||
Trading assets at fair value – derivatives | 37.4 | – | 37.4 | – | ||||||||||||||
Derivative counterparty assets at fair value | 12.9 | – | 12.9 | – | ||||||||||||||
Total | $ | 1,551.8 | $ | 689.6 | $ | 862.2 | $ | – | ||||||||||
Liabilities | ||||||||||||||||||
Trading liabilities at fair value – derivatives | $ | (86.9 | ) | $ | – | $ | (77.2 | ) | $ | (9.7 | ) | |||||||
Derivative counterparty liabilities at fair value | (24.1 | ) | – | (24.1 | ) | – | ||||||||||||
Total | $ | (111.0 | ) | $ | – | $ | (101.3 | ) | $ | (9.7 | ) |
Fair Value Measurements at Reporting Date Using: | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total | Level 1 | Level 2 | Level 3 | Total Gains and (Losses) | ||||||||||||||||||
Assets | ||||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||||
Assets Held for Sale | $ | 949.6 | $ | – | $ | – | $ | 949.6 | $ | (73.6 | ) | |||||||||||
Impaired loans | 13.2 | – | – | 13.2 | (4.9 | ) | ||||||||||||||||
Total | $ | 962.8 | $ | – | $ | – | $ | 962.8 | $ | (78.5 | ) | |||||||||||
December 31, 2013 | ||||||||||||||||||||||
Assets Held for Sale | $ | 731.1 | $ | – | $ | – | $ | 731.1 | $ | (59.4 | ) | |||||||||||
Impaired loans | 18.5 | – | – | 18.5 | (1.6 | ) | ||||||||||||||||
Total | $ | 749.6 | $ | – | $ | – | $ | 749.6 | $ | (61.0 | ) |
Total (all derivatives) | ||||||
---|---|---|---|---|---|---|
December 31, 2012 | $ | (5.8 | ) | |||
Gains or losses realized/unrealized included in Other Income(1) | (3.9 | ) | ||||
December 31, 2013 | (9.7 | ) | ||||
Gains or losses realized/unrealized included in Other Income(1) | (16.9 | ) | ||||
December 31, 2014 | $ | (26.6 | ) |
(1) | Valuation of the derivatives related to the GSI facilities and written options on certain CIT Bank CDs. |
December 31, 2014 | December 31, 2013 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | ||||||||||||||||
Derivative assets at fair value – non-qualifying hedges | $ | 93.3 | $ | 93.3 | $ | 37.4 | $ | 37.4 | |||||||||||
Derivative counterparty assets at fair value | 74.7 | 74.7 | 12.9 | 12.9 | |||||||||||||||
Assets held for sale (excluding leases) | 67.0 | 67.2 | 415.2 | 416.4 | |||||||||||||||
Loans (excluding leases)(1) | 14,379.5 | 14,076.2 | 13,955.5 | 14,017.7 | |||||||||||||||
Securities purchased under agreements to resell | 650.0 | 650.0 | – | – | |||||||||||||||
Investment securities | 1,550.3 | 1,558.3 | 2,630.7 | 2,629.2 | |||||||||||||||
Other assets subject to fair value disclosure and unsecured counterparty receivables(2) | 886.2 | 886.2 | 586.5 | 586.5 | |||||||||||||||
Liabilities | |||||||||||||||||||
Deposits(3) | (15,891.4 | ) | (16,105.7 | ) | (12,565.0 | ) | (12,751.9 | ) | |||||||||||
Derivative liabilities at fair value – non-qualifying hedges | (62.3 | ) | (62.3 | ) | (86.9 | ) | (86.9 | ) | |||||||||||
Derivative counterparty liabilities at fair value | – | – | (24.1 | ) | (24.1 | ) | |||||||||||||
Long-term borrowings(3) | (18,657.9 | ) | (19,244.4 | ) | (18,693.1 | ) | (19,340.8 | ) | |||||||||||
Credit balances of factoring clients(1) | (1,622.1 | ) | (1,622.1 | ) | (1,336.1 | ) | (1,336.1 | ) | |||||||||||
Other liabilities subject to fair value disclosure(4) | (2,066.8 | ) | (2,066.8 | ) | (1,919.1 | ) | (1,919.1 | ) |
(1) | At December 31, 2014, the credit balances of factoring clients, which was previously reflected as an offset to "Loans", is separately disclosed in the Liabilities section of the table above and utilize Level 3 inputs. A corresponding reclassification was made to 2013 classification to conform to the current year presentation. |
(2) | 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 the short-term nature and are classified as level 3. The unsecured counterparty receivables primarily consist of amounts owed to CIT from GSI for debt discount, return of collateral posted to GSI and settlements resulting from market value changes to asset-backed securities underlying the GSI Facilities. |
(3) | Deposits and long-term borrowings include accrued interest, which is included in “Other liabilities” in the Balance Sheet. |
(4) | 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. |
Issued | Less Treasury | Outstanding | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Common Stock – December 31, 2012 | 201,283,063 | (414,261 | ) | 200,868,802 | ||||||||||
Restricted stock issued | 873,842 | – | 873,842 | |||||||||||
Repurchase of common stock | – | (4,006,941 | ) | (4,006,941 | ) | |||||||||
Shares held to cover taxes on vesting restricted shares and other | – | (357,442 | ) | (357,442 | ) | |||||||||
Employee stock purchase plan participation | 25,490 | – | 25,490 | |||||||||||
Common Stock – December 31, 2013 | 202,182,395 | (4,778,644 | ) | 197,403,751 | ||||||||||
Restricted stock issued | 913,399 | – | 913,399 | |||||||||||
Repurchase of common stock | – | (17,067,648 | ) | (17,067,648 | ) | |||||||||
Shares held to cover taxes on vesting restricted shares and other | – | (360,424 | ) | (360,424 | ) | |||||||||
Employee stock purchase plan participation | 31,497 | – | 31,497 | |||||||||||
Common Stock – December 31, 2014 | 203,127,291 | (22,206,716 | ) | 180,920,575 |
December 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Gross Unrealized | Income Taxes | Net Unrealized | Gross Unrealized | Income Taxes | Net Unrealized | ||||||||||||||||||||||
Changes in benefit plan net gain/(loss) and prior service (cost)/credit | $ | (58.7 | ) | $ | 0.2 | $ | (58.5 | ) | $ | (24.3 | ) | $ | 0.2 | $ | (24.1 | ) | |||||||||||
Foreign currency translation adjustments | (75.4 | ) | – | (75.4 | ) | (49.4 | ) | – | (49.4 | ) | |||||||||||||||||
Changes in fair values of derivatives qualifying as cash flow hedges | – | – | – | (0.2 | ) | – | (0.2 | ) | |||||||||||||||||||
Unrealized net gains (losses) on available for sale securities | – | – | – | 0.2 | (0.1 | ) | 0.1 | ||||||||||||||||||||
Total accumulated other comprehensive loss | $ | (134.1 | ) | $ | 0.2 | $ | (133.9 | ) | $ | (73.7 | ) | $ | 0.1 | $ | (73.6 | ) |
Changes in benefit plan net gain (loss) and prior service (cost) credit | Foreign currency translation adjustments | Unrealized net gains (losses) on available for sale securities | Changes in fair values of derivatives qualifying as cash flow hedges | Total accumulated other comprehensive income (loss) (”AOCI“) | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance as of December 31, 2012 | $ | (43.1 | ) | $ | (36.6 | ) | $ | 2.1 | $ | (0.1 | ) | $ | (77.7 | ) | ||||||||
AOCI activity before reclassifications | 19.2 | (21.2 | ) | (2.8 | ) | 0.6 | (4.2 | ) | ||||||||||||||
Amounts reclassed from AOCI | (0.2 | ) | 8.4 | 0.8 | (0.7 | ) | 8.3 | |||||||||||||||
Net current period AOCI | 19.0 | (12.8 | ) | (2.0 | ) | (0.1 | ) | 4.1 | ||||||||||||||
Balance as of December 31, 2013 | $ | (24.1 | ) | $ | (49.4 | ) | $ | 0.1 | $ | (0.2 | ) | $ | (73.6 | ) | ||||||||
AOCI activity before reclassifications | (42.5 | ) | (41.8 | ) | (0.6 | ) | 0.2 | (84.7 | ) | |||||||||||||
Amounts reclassed from AOCI | 8.1 | 15.8 | 0.5 | – | 24.4 | |||||||||||||||||
Net current period AOCI | (34.4 | ) | (26.0 | ) | (0.1 | ) | 0.2 | (60.3 | ) | |||||||||||||
Balance as of December 31, 2014 | $ | (58.5 | ) | $ | (75.4 | ) | $ | – | $ | – | $ | (133.9 | ) |
Years Ended December 31, | |||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | ||||||||||||||||||||||||||
Gross Amount | Tax | Net Amount | Gross Amount | Tax | Net Amount | ||||||||||||||||||||||
Changes in benefit plan net gain/(loss) and prior service (cost)/credit | |||||||||||||||||||||||||||
Gains (Losses) | $ | 8.1 | $ | – | $ | 8.1 | $ | (0.2 | ) | $ | – | $ | (0.2 | ) | |||||||||||||
Foreign currency translation adjustments | |||||||||||||||||||||||||||
Gains (Losses) | 15.8 | – | 15.8 | 8.4 | – | 8.4 | |||||||||||||||||||||
Net unrealized gains (losses) on available for sale securities | |||||||||||||||||||||||||||
Gains (Losses) | 0.8 | (0.3 | ) | 0.5 | 1.3 | (0.5 | ) | 0.8 | |||||||||||||||||||
Changes in fair value of derivatives qualifying as cash flow hedges | |||||||||||||||||||||||||||
Gains (Losses) | – | – | – | (0.7 | ) | – | (0.7 | ) | |||||||||||||||||||
Total Reclassifications out of AOCI | $ | 24.7 | $ | (0.3 | ) | $ | 24.4 | $ | 8.8 | $ | (0.5 | ) | $ | 8.3 |
CIT | CIT Bank | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Tier 1 Capital | December 31, 2014 | December 31, 2013 | December 31, 2014 | December 31, 2013 | |||||||||||||||
Total stockholders’ equity(1) | $ | 9,068.9 | $ | 8,838.8 | $ | 2,716.4 | $ | 2,596.6 | |||||||||||
Effect of certain items in accumulated other comprehensive loss excluded from Tier 1 Capital and qualifying noncontrolling interest | 53.0 | 24.2 | (0.2 | ) | – | ||||||||||||||
Adjusted total equity | 9,121.9 | 8,863.0 | 2,716.2 | 2,596.6 | |||||||||||||||
Less: Goodwill(2) | (571.3 | ) | (338.3 | ) | (167.8 | ) | – | ||||||||||||
Disallowed deferred tax assets | (416.8 | ) | (26.6 | ) | – | – | |||||||||||||
Disallowed intangible assets(2) | (25.7 | ) | (20.3 | ) | (12.1 | ) | – | ||||||||||||
Investment in certain subsidiaries | (36.7 | ) | (32.3 | ) | – | – | |||||||||||||
Other Tier 1 components(3) | (4.1 | ) | (6.0 | ) | – | – | |||||||||||||
Tier 1 Capital | 8,067.3 | 8,439.5 | 2,536.3 | 2,596.6 | |||||||||||||||
Tier 2 Capital | |||||||||||||||||||
Qualifying allowance for credit losses and other reserves(4) | 381.8 | 383.9 | 245.1 | 193.6 | |||||||||||||||
Less: Investment in certain subsidiaries | (36.7 | ) | (32.3 | ) | – | – | |||||||||||||
Other Tier 2 components(5) | – | 0.1 | 0.1 | – | |||||||||||||||
Total qualifying capital | $ | 8,412.4 | $ | 8,791.2 | $ | 2,781.5 | $ | 2,790.2 | |||||||||||
Risk-weighted assets | $ | 55,480.9 | $ | 50,571.2 | $ | 19,552.3 | $ | 15,451.9 | |||||||||||
Total Capital (to risk-weighted assets): | |||||||||||||||||||
Actual | 15.2 | % | 17.4 | % | 14.2 | % | 18.1 | % | |||||||||||
Required Ratio for Capital Adequacy Purposes to be well capitalized | 10.0 | % | 10.0 | % | 10.0 | % | 10.0 | % | |||||||||||
Tier 1 Capital (to risk-weighted assets): | |||||||||||||||||||
Actual | 14.5 | % | 16.7 | % | 13.0 | % | 16.8 | % | |||||||||||
Required Ratio for Capital Adequacy Purposes to be well capitalized | 6.0 | % | 6.0 | % | 6.0 | % | 6.0 | % | |||||||||||
Tier 1 Leverage Ratio: | |||||||||||||||||||
Actual | 17.4 | % | 18.1 | % | 12.2 | % | 16.9 | % | |||||||||||
Required Ratio for Capital Adequacy Purposes | 4.0 | % | 4.0 | % | 5.0 | % | 5.0 | % |
(1) | See Consolidated Balance Sheets for the components of Total stockholders’ equity. |
(2) | Goodwill and disallowed intangible assets adjustments also reflect the portion included within assets held for sale. |
(3) | Includes the Tier 1 capital charge for nonfinancial equity investments and the Tier 1 capital deduction for net unrealized losses on available-for-sale marketable securities (net of tax). |
(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) | Banking organizations are permitted to include in Tier 2 Capital up to 45% of net unrealized pretax gains on available-for-sale equity securities with readily determinable fair values. |
tax asset and increase to goodwill and intangible assets. The reversals benefited net income and stockholders’ equity but had minimal impact on our regulatory capital ratios as the majority of the deferred tax asset balance is disallowed for regulatory capital purposes. The increase in goodwill and intangible assets was due to the acquisitions of Direct Capital and Nacco and is also disallowed for regulatory capital purposes.
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Earnings / (Loss) | |||||||||||||||
Net income (loss) from continuing operations | $ | 1,077.5 | $ | 644.4 | $ | (535.8 | ) | ||||||||
Net Income (loss) from discontinued operation | 52.5 | 31.3 | (56.5 | ) | |||||||||||
Net income (loss) | $ | 1,130.0 | $ | 675.7 | $ | (592.3 | ) | ||||||||
Weighted Average Common Shares Outstanding | |||||||||||||||
Basic shares outstanding | 188,491 | 200,503 | 200,887 | ||||||||||||
Stock-based awards(1) | 972 | 1,192 | – | ||||||||||||
Diluted shares outstanding | 189,463 | 201,695 | 200,887 | ||||||||||||
Basic Earnings Per common share data | |||||||||||||||
Income (loss) from continuing operations | $ | 5.71 | $ | 3.21 | $ | (2.67 | ) | ||||||||
Income (loss) from discontinued operation | 0.28 | 0.16 | (0.28 | ) | |||||||||||
Basic income (loss) per common share | $ | 5.99 | $ | 3.37 | $ | (2.95 | ) | ||||||||
Diluted Earnings Per common share data | |||||||||||||||
Income (loss) from continuing operations | $ | 5.69 | $ | 3.19 | $ | (2.67 | ) | ||||||||
Income (loss) from discontinued operation | 0.27 | 0.16 | (0.28 | ) | |||||||||||
Diluted income (loss) per common share | $ | 5.96 | $ | 3.35 | $ | (2.95 | ) |
(1) | Represents the incremental shares from in-the-money non-qualified restricted stock awards, performance shares, and stock options. Weighted average restricted shares, performance shares and options that were out-of-the money and excluded from diluted earnings per share totaled 1.3 million, 1.1 million, and 1.5 million, for the December 31, 2014, 2013 and 2012 periods, respectively. |
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Rental income on operating leases | $ | 2,093.0 | $ | 1,897.4 | $ | 1,900.8 | |||||||||
Other Income: | |||||||||||||||
Factoring commissions | 120.2 | 122.3 | 126.5 | ||||||||||||
Gains on sales of leasing equipment | 98.4 | 130.5 | 117.6 | ||||||||||||
Fee revenues | 93.1 | 101.5 | 86.1 | ||||||||||||
Gain on investments | 39.0 | 8.2 | 40.2 | ||||||||||||
Gains on loan and portfolio sales | 34.3 | 48.8 | 162.3 | ||||||||||||
Recoveries of loans charged off pre-emergence and loans charged off prior to transfer to held for sale | 19.8 | 21.9 | 54.3 | ||||||||||||
Counterparty receivable accretion | 10.7 | 8.6 | 88.7 | ||||||||||||
Gains (losses) on derivatives and foreign currency exchange | (37.8 | ) | 1.0 | (5.7 | ) | ||||||||||
Impairment on assets held for sale | (100.7 | ) | (124.0 | ) | (115.1 | ) | |||||||||
Other revenues | 28.4 | 62.5 | 59.8 | ||||||||||||
Total other income | 305.4 | 381.3 | 614.7 | ||||||||||||
Total non-interest income | $ | 2,398.4 | $ | 2,278.7 | $ | 2,515.5 |
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Depreciation on operating lease equipment | $ | 615.7 | $ | 540.6 | $ | 513.2 | |||||||||
Maintenance and other operating lease expenses | 196.8 | 163.1 | 139.4 | ||||||||||||
Operating expenses: | |||||||||||||||
Compensation and benefits | 533.8 | 535.4 | 537.1 | ||||||||||||
Technology | 85.2 | 83.3 | 81.6 | ||||||||||||
Professional fees | 80.6 | 69.1 | 63.8 | ||||||||||||
Net occupancy expense | 35.0 | 35.3 | 36.1 | ||||||||||||
Advertising and marketing | 33.7 | 25.2 | 36.5 | ||||||||||||
Provision for severance and facilities exiting activities | 31.4 | 36.9 | 22.7 | ||||||||||||
Other expenses(1) | 142.1 | 185.0 | 116.2 | ||||||||||||
Total operating expenses | 941.8 | 970.2 | 894.0 | ||||||||||||
Loss on debt extinguishments | 3.5 | – | 61.2 | ||||||||||||
Total other expenses | $ | 1,757.8 | $ | 1,673.9 | $ | 1,607.8 |
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
U.S. | $ | 342.4 | $ | 374.2 | $ | (1,004.3 | ) | ||||||||
Non-U.S. | 338.4 | 360.0 | 588.9 | ||||||||||||
Income (loss) from continuing operations before provision for income taxes | $ | 680.8 | $ | 734.2 | $ | (415.4 | ) |
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Current federal income tax provision | $ | 0.9 | $ | 0.1 | $ | 1.5 | |||||||||
Deferred federal income tax provision (benefit) | (405.6 | ) | 18.9 | 9.5 | |||||||||||
Total federal income tax provision (benefit) | (404.7 | ) | 19.0 | 11.0 | |||||||||||
Current state and local income tax provision | 6.9 | 6.0 | 16.1 | ||||||||||||
Deferred state and local income tax provision (benefit) | 2.1 | 1.0 | (2.1 | ) | |||||||||||
Total state and local income tax provision | 9.0 | 7.0 | 14.0 | ||||||||||||
Total international income tax provision | 1.2 | 66.5 | 108.8 | ||||||||||||
Total provision (benefit) for income taxes | $ | (394.5 | ) | $ | 92.5 | $ | 133.8 | ||||||||
Continuing operations | $ | (397.9 | ) | $ | 83.9 | $ | 116.7 | ||||||||
Discontinued operation | 3.4 | 8.6 | 17.1 | ||||||||||||
Total provision (benefit) for income taxes | $ | (394.5 | ) | $ | 92.5 | $ | 133.8 |
Effective Tax Rate | |||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||
Pretax Income | Income tax expense (benefit) | Percent of pretax income | Pretax (loss) | Income tax expense (benefit) | Percent of pretax (loss) | Pretax income (loss) | Income tax expense (benefit) | Percent of pretax income | |||||||||||||||||||||||||||||||
Continuing Operations | |||||||||||||||||||||||||||||||||||||||
Federal income tax rate | $ | 680.8 | $ | 238.3 | 35.0 | % | $ | 734.2 | $ | 256.9 | 35.0 | % | $ | (415.4 | ) | $ | (145.3 | ) | 35.0 | % | |||||||||||||||||||
Increase (decrease) due to: | |||||||||||||||||||||||||||||||||||||||
State and local income taxes, net of federal income tax benefit | 9.0 | 1.3 | 6.2 | 0.8 | 13.5 | (3.2 | ) | ||||||||||||||||||||||||||||||||
Lower tax rates applicable to non-U.S. earnings | (99.7 | ) | (14.6 | ) | (97.1 | ) | (13.2 | ) | (152.9 | ) | 36.8 | ||||||||||||||||||||||||||||
International income subject to U.S. tax | 46.0 | 6.8 | 55.7 | 7.6 | 322.5 | (77.7 | ) | ||||||||||||||||||||||||||||||||
Unrecognized tax benefits | (269.2 | ) | (39.5 | ) | 0.3 | – | (227.8 | ) | 54.9 | ||||||||||||||||||||||||||||||
Deferred income taxes on international unremitted earnings | (7.8 | ) | (1.2 | ) | (24.7 | ) | (3.4 | ) | 112.0 | (27.0 | ) | ||||||||||||||||||||||||||||
Valuation allowances | (313.3 | ) | (46.0 | ) | (100.6 | ) | (13.7 | ) | 211.4 | (50.9 | ) | ||||||||||||||||||||||||||||
International tax settlements | (1.1 | ) | (0.2 | ) | (11.2 | ) | (1.5 | ) | – | – | |||||||||||||||||||||||||||||
Other | (0.1 | ) | – | (1.6 | ) | (0.2 | ) | (16.7 | ) | 4.0 | |||||||||||||||||||||||||||||
Effective Tax Rate – Continuing Operations | $ | (397.9 | ) | (58.4 | )% | $ | 83.9 | 11.4 | % | $ | 116.7 | (28.1 | )% | ||||||||||||||||||||||||||
Discontinued Operation: | |||||||||||||||||||||||||||||||||||||||
Federal income tax rate | $ | 55.9 | $ | 19.6 | 35.0 | % | $ | 39.9 | $ | 14.0 | 35.0 | % | $ | (39.4 | ) | $ | (13.7 | ) | 35.0 | % | |||||||||||||||||||
Increase (decrease) due to: | |||||||||||||||||||||||||||||||||||||||
State and local income taxes, net of federal income tax benefit | (0.1 | ) | (0.1 | ) | 0.7 | 1.7 | 0.5 | (1.4 | ) | ||||||||||||||||||||||||||||||
Lower tax rates applicable to non-U.S. earnings | 1.5 | 2.7 | 15.3 | 38.5 | 11.9 | (30.3 | ) | ||||||||||||||||||||||||||||||||
International income subject to U.S. tax | (2.7 | ) | (4.7 | ) | (17.9 | ) | (44.9 | ) | (17.4 | ) | 44.1 | ||||||||||||||||||||||||||||
Valuation Allowances | (14.9 | ) | (26.7 | ) | (3.5 | ) | (8.8 | ) | 35.8 | (91.1 | ) | ||||||||||||||||||||||||||||
Effective Tax Rate – Discontinued Operation | 3.4 | 6.2 | % | 8.6 | 21.5 | % | 17.1 | (43.7 | )% | ||||||||||||||||||||||||||||||
Total Effective Tax Rate | $ | (394.5 | ) | (53.5 | )% | $ | 92.5 | 11.9 | % | $ | 133.8 | (29.4 | )% |
December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | ||||||||||
Deferred Tax Assets: | |||||||||||
Net operating loss (NOL) carry forwards | $ | 2,837.0 | $ | 2,694.7 | |||||||
Loans and direct financing leases | 48.5 | 166.4 | |||||||||
Provision for credit losses | 163.7 | 147.9 | |||||||||
Accrued liabilities and reserves | 91.7 | 97.2 | |||||||||
FSA adjustments – aircraft and rail contracts | 46.1 | 52.8 | |||||||||
Other | 145.3 | 114.0 | |||||||||
Total gross deferred tax assets | 3,332.3 | 3,273.0 | |||||||||
Deferred Tax Liabilities: | |||||||||||
Operating leases | (1,797.6 | ) | (1,549.3 | ) | |||||||
International unremitted earnings | (162.0 | ) | (168.5 | ) | |||||||
Debt | (3.6 | ) | (97.7 | ) | |||||||
Goodwill and intangibles | (62.4 | ) | (47.3 | ) | |||||||
Other | (29.0 | ) | (71.4 | ) | |||||||
Total deferred tax liabilities | (2,054.6 | ) | (1,934.2 | ) | |||||||
Total net deferred tax asset before valuation allowances | 1,277.7 | 1,338.8 | |||||||||
Less: Valuation allowances | (1,122.4 | ) | (1,495.3 | ) | |||||||
Net deferred tax asset (liability) after valuation allowances | $ | 155.3 | $ | (156.5 | ) |
- | Taxable income in carryback years, |
- | Future reversals of existing taxable temporary differences (deferred tax liabilities), |
- | Prudent and feasible tax planning strategies, and |
- | Future taxable income forecasts. |
- | The U.S. Affiliated Group transitioned into a 3-year (12 quarter) cumulative normalized income position in the third quarter, resulting in the Company’s ability to significantly increase the reliance on future taxable income forecasts. |
- | Management’s long-term forecast of future U.S. taxable income supports partial utilization of the U.S. federal NOLs prior to their expiration. |
- | The federal NOLs will not expire until 2027 through 2033. |
- | Separate State filing entities remained in a three year cumulative loss. |
- | State NOLs expiration periods vary in time and availability. |
consummation of the acquisition. The Company is currently evaluating the impact of the acquisition on the U.S. state NOLs and expects the acquisition to utilize some portion of these amounts which would cause a partial reduction to the U.S. state valuation allowance.
Liabilities for Unrecognized Tax Benefits | Interest /Penalties | Grand Total | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at December 31, 2013 | $ | 320.1 | $ | 13.3 | �� | $ | 333.4 | |||||||
Additions for tax positions related to current year | 8.5 | 0.8 | 9.3 | |||||||||||
Additions for tax positions related to prior years | 1.0 | 0.8 | 1.8 | |||||||||||
Income Tax Audit Settlements | (271.2 | ) | (0.8 | ) | (272.0 | ) | ||||||||
Foreign currency revaluation | (4.7 | ) | (0.8 | ) | (5.5 | ) | ||||||||
Balance at December 31, 2014 | $ | 53.7 | $ | 13.3 | $ | 67.0 |
Retirement Benefits | Post-Retirement Benefits | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Change in benefit obligation | |||||||||||||||||||
Benefit obligation at beginning of year | $ | 452.4 | $ | 480.8 | $ | 38.8 | $ | 42.3 | |||||||||||
Service cost | 0.2 | 0.5 | – | 0.1 | |||||||||||||||
Interest cost | 20.2 | 17.8 | 1.6 | 1.6 | |||||||||||||||
Plan amendments, curtailments, and settlements | (29.5 | ) | (1.7 | ) | – | 0.6 | |||||||||||||
Actuarial loss/(gain) | 50.4 | (20.1 | ) | 0.8 | (2.8 | ) | |||||||||||||
Benefits paid | (25.8 | ) | (25.3 | ) | (4.3 | ) | (4.7 | ) | |||||||||||
Other(1) | (4.3 | ) | 0.4 | 1.7 | 1.7 | ||||||||||||||
Benefit obligation at end of year | 463.6 | 452.4 | 38.6 | 38.8 | |||||||||||||||
Change in plan assets | |||||||||||||||||||
Fair value of plan assets at beginning of period | 356.9 | 346.3 | – | – | |||||||||||||||
Actual return on plan assets | 28.5 | 16.0 | – | – | |||||||||||||||
Employer contributions | 33.7 | 21.1 | 2.5 | 3.0 | |||||||||||||||
Plan settlements | (29.3 | ) | (1.7 | ) | – | (0.1 | ) | ||||||||||||
Benefits paid | (25.8 | ) | (25.3 | ) | (4.3 | ) | (4.7 | ) | |||||||||||
Other(1) | (4.1 | ) | 0.5 | 1.8 | 1.8 | ||||||||||||||
Fair value of plan assets at end of period | 359.9 | 356.9 | – | – | |||||||||||||||
Funded status at end of year(2)(3) | $ | (103.7 | ) | $ | (95.5 | ) | $ | (38.6 | ) | $ | (38.8 | ) |
(1) | Consists of the following: plan participants’ contributions and currency translation adjustments. |
(2) | These amounts were recognized as liabilities in the Consolidated Balance Sheet at December 31, 2014 and 2013. |
(3) | Company assets of $91.0 million and $95.7 million as of December 31, 2014 and December 31, 2013, respectively, related to the non-qualified U.S. executive retirement plan obligation are not included in plan assets but related liabilities are in the benefit obligation. |
December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | ||||||||||
Projected benefit obligation | $ | 463.6 | $ | 421.4 | |||||||
Accumulated benefit obligation | 463.1 | 418.8 | |||||||||
Fair value of plan assets | 359.9 | 325.9 |
Retirement Benefits | Post-Retirement Benefits | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Service cost | $ | 0.2 | $ | 0.5 | $ | 14.5 | $ | – | $ 0.1 | $ | 0.8 | ||||||||||||||||
Interest cost | 20.2 | 17.8 | 19.9 | 1.6 | 1.6 | 1.9 | |||||||||||||||||||||
Expected return on plan assets | (20.8 | ) | (18.9 | ) | (18.4 | ) | – | – | – | ||||||||||||||||||
Amortization of prior service cost | – | – | – | (0.5 | ) | (0.6 | ) | (0.3 | ) | ||||||||||||||||||
Amortization of net loss/(gain) | 7.5 | 1.0 | 2.1 | (0.7 | ) | (0.2 | ) | (0.4 | ) | ||||||||||||||||||
Settlement and curtailment (gain)/loss | 2.9 | 0.2 | (0.6 | ) | – | (0.3 | ) | – | |||||||||||||||||||
Termination benefits | – | – | 0.3 | – | – | – | |||||||||||||||||||||
Net periodic benefit cost | 10.0 | 0.6 | 17.8 | 0.4 | 0.6 | 2.0 | |||||||||||||||||||||
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income | |||||||||||||||||||||||||||
Net (gain)/loss | 42.6 | (17.1 | ) | (2.6 | ) | 1.0 | (2.5 | ) | 0.6 | ||||||||||||||||||
Prior service cost (credit) | – | – | – | – | – | (7.7 | ) | ||||||||||||||||||||
Amortization, settlement or curtailment recognition of net gain/(loss) | (10.4 | ) | (1.1 | ) | (2.2 | ) | 0.7 | 0.1 | 0.4 | ||||||||||||||||||
Amortization, settlement or curtailment recognition of prior service (cost)/credit | – | – | – | 0.5 | 1.4 | 0.2 | |||||||||||||||||||||
Total recognized in OCI | 32.2 | (18.2 | ) | (4.8 | ) | 2.2 | (1.0 | ) | (6.5 | ) | |||||||||||||||||
Total recognized in net periodic benefit cost and OCI | $ | 42.2 | $ | (17.6 | ) | $ | 13.0 | $ | 2.6 | $ | (0.4 | ) | $ | (4.5 | ) |
Retirement Benefits | Post-Retirement Benefits | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Discount rate | 3.74 | % | 4.59 | % | 3.74 | % | 4.50 | % | |||||||||||
Rate of compensation increases | 0.09 | % | 3.03 | % | (1) | (1) | |||||||||||||
Health care cost trend rate | |||||||||||||||||||
Pre-65 | (1) | (1) | 7.20 | % | 7.40 | % | |||||||||||||
Post-65 | (1) | (1) | 7.30 | % | 7.60 | % | |||||||||||||
Ultimate health care cost trend rate | (1) | (1) | 4.50 | % | 4.50 | % | |||||||||||||
Year ultimate reached | (1) | (1) | 2029 | 2029 |
Retirement Benefits | Post-Retirement Benefits | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Discount rate | 4.58 | % | 3.81 | % | 4.50 | % | 3.86 | % | |||||||||||
Expected long-term return on plan assets | 5.74 | % | 5.57 | % | (1) | (1) | |||||||||||||
Rate of compensation increases | 3.03 | % | 3.03 | % | (1) | 3.00 | % |
(1) | Not applicable. |
December 31, 2014 | Level 1 | Level 2 | Level 3 | Total Fair Value | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Cash | $ | 5.8 | $ | – | $ | – | $ | 5.8 | |||||||||||
Mutual Fund | 72.0 | – | – | 72.0 | |||||||||||||||
Common Collective Trust | – | 200.1 | – | 200.1 | |||||||||||||||
Common Stock | 19.6 | – | – | 19.6 | |||||||||||||||
Exchange Traded Funds | 25.7 | – | – | 25.7 | |||||||||||||||
Short Term Investment Fund | – | 1.5 | – | 1.5 | |||||||||||||||
Partnership | – | – | 9.7 | 9.7 | |||||||||||||||
Hedge Fund | – | – | 25.5 | 25.5 | |||||||||||||||
Insurance Contracts | – | – | – | – | |||||||||||||||
$ | 123.1 | $ | 201.6 | $ | 35.2 | $ | 359.9 | ||||||||||||
December 31, 2013 | |||||||||||||||||||
Cash | $ | 0.2 | $ | – | $ | – | $ | 0.2 | |||||||||||
Mutual Fund | 70.4 | – | – | 70.4 | |||||||||||||||
Common Collective Trust | – | 179.3 | – | 179.3 | |||||||||||||||
Common Stock | 18.1 | – | – | 18.1 | |||||||||||||||
Exchange Traded Funds | 21.2 | – | – | 21.2 | |||||||||||||||
Short Term Investment Fund | – | 4.1 | – | 4.1 | |||||||||||||||
Partnership | – | – | 9.7 | 9.7 | |||||||||||||||
Hedge Fund | – | – | 22.9 | 22.9 | |||||||||||||||
Insurance Contracts | – | – | 31.0 | 31.0 | |||||||||||||||
$ | 109.9 | $ | 183.4 | $ | 63.6 | $ | 356.9 |
Total | Partnership | Hedge Funds | Insurance Contracts | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2013 | $ | 63.6 | $ | 9.7 | $ | 22.9 | $ | 31.0 | ||||||||||
Realized and Unrealized Gains (Losses) | 0.1 | – | 0.1 | – | ||||||||||||||
Purchases, sales, and settlements, net | (28.5 | ) | – | 2.5 | (31.0 | ) | ||||||||||||
Net Transfers into and/or out of Level 3 | – | – | – | – | ||||||||||||||
December 31, 2014 | $ | 35.2 | $ | 9.7 | $ | 25.5 | $ | – | ||||||||||
Change in Unrealized Gains (Losses) for Investments still held at December 31, 2014 | $ | 0.1 | $ | – | $ | 0.1 | $ | – |
For the years ended December 31, | Retirement Benefits | Gross Postretirement Benefits | Medicare Subsidy | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2015 | $ | 26.6 | $ | 3.0 | $ | 0.3 | ||||||||
2016 | 26.3 | 3.0 | 0.3 | |||||||||||
2017 | 25.7 | 3.0 | 0.4 | |||||||||||
2018 | 26.4 | 2.9 | 0.4 | |||||||||||
2019 | 26.9 | 2.8 | 0.4 | |||||||||||
2020-2024 | 135.0 | 12.8 | 1.0 |
these cash-settled RSUs are re-measured at the end of each reporting period until the award is settled.
Stock-Settled Awards | Cash-Settled Awards | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Number of Shares | Weighted Average Grant Date Value | Number of Shares | Weighted Average Grant Date Value | ||||||||||||||||
December 31, 2014 | |||||||||||||||||||
Unvested at beginning of period | 2,219,463 | $ | 41.51 | 5,508 | $ | 41.93 | |||||||||||||
Vested / unsettled Stock Salary at beginning of period | 15,066 | 41.46 | 2,165 | 39.05 | |||||||||||||||
PSUs – granted to employees | 138,685 | 47.77 | – | – | |||||||||||||||
RSUs – granted to employees | 905,674 | 47.71 | – | – | |||||||||||||||
RSUs – granted to directors | 35,683 | 43.07 | 4,046 | 42.01 | |||||||||||||||
Forfeited / cancelled | (107,445 | ) | 43.87 | – | – | ||||||||||||||
Vested / settled awards | (913,387 | ) | 41.70 | (4,284 | ) | 41.20 | |||||||||||||
Vested / unsettled awards | (25,255 | ) | 40.38 | (1,082 | ) | 39.05 | |||||||||||||
Unvested at end of period | 2,268,484 | $ | 44.22 | 6,353 | $ | 41.99 | |||||||||||||
December 31, 2013 | |||||||||||||||||||
Unvested at beginning of period | 1,883,292 | $ | 40.15 | 9,677 | $ | 39.56 | |||||||||||||
Vested / unsettled Stock Salary at beginning of period | 114,119 | 38.20 | 3,247 | 39.05 | |||||||||||||||
PSUs – granted to employees | 111,046 | 42.55 | – | – | |||||||||||||||
RSUs – granted to employees | 1,015,861 | 42.76 | – | – | |||||||||||||||
RSUs – granted to directors | 23,551 | 44.27 | 2,549 | 44.14 | |||||||||||||||
Forfeited / cancelled | (40,697 | ) | 41.62 | – | – | ||||||||||||||
Vested / settled awards | (872,643 | ) | 39.81 | (7,800 | ) | 39.31 | |||||||||||||
Vested / unsettled Stock Salary Awards | (15,066 | ) | 41.46 | (2,165 | ) | 39.05 | |||||||||||||
Unvested at end of period | 2,219,463 | $ | 41.51 | 5,508 | $ | 41.93 |
December 31, 2014 | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Due to Expire | December 31, 2013 | |||||||||||||||
Within One Year | After One Year | Total Outstanding | Total Outstanding | |||||||||||||
Financing Commitments | ||||||||||||||||
Financing and leasing assets | $ | 729.4 | $ | 4,018.5 | $ | 4,747.9 | $ | 4,325.8 | ||||||||
Letters of credit | ||||||||||||||||
Standby letters of credit | 23.4 | 336.7 | 360.1 | 302.3 | ||||||||||||
Other letters of credit | 28.3 | – | 28.3 | 35.9 | ||||||||||||
Guarantees | ||||||||||||||||
Deferred purchase agreements | 1,854.4 | – | 1,854.4 | 1,771.6 | ||||||||||||
Guarantees, acceptances and other recourse obligations | 2.8 | – | 2.8 | 3.9 | ||||||||||||
Purchase and Funding Commitments | ||||||||||||||||
Aerospace manufacturer purchase commitments | 945.7 | 9,874.7 | 10,820.4 | 8,744.5 | ||||||||||||
Rail and other manufacturer purchase commitments | 943.0 | 380.2 | 1,323.2 | 1,054.0 |
has been named as an additional defendant in a pending class action in the Superior Court of Quebec, Canada. Other cases may be filed in U.S. and Canadian courts. The plaintiffs in the pending U.S. and Canadian actions assert claims of negligence and strict liability based upon alleged design defect against the Company in connection with the CIT/EF tank cars. The Company has rights of indemnification and defense against its lessees, WPC and MMA (a debtor in bankruptcy), and also has rights as an additional insured under liability coverage maintained by the lessees. On July 28, 2014, the Company commenced a lawsuit against WPC in the U.S. District Court in the District of Minnesota to enforce its rights of indemnification and defense. In addition to its indemnification and insurance rights against its lessees, the Company and its subsidiaries maintain contingent and general liability insurance for claims of this nature, and the Company and its insurers are working cooperatively with respect to these claims.
Years Ended December 31, | ||||||
2015 | $ | 31.3 | ||||
2016 | 29.5 | |||||
2017 | 25.7 | |||||
2018 | 24.5 | |||||
2019 | 21.8 | |||||
Thereafter | 37.4 | |||||
Total | $ | 170.2 |
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(dollars in millions) | 2014 | 2013 | 2012 | ||||||||||||
Premises | $ | 20.1 | $ | 19.0 | $ | 19.8 | |||||||||
Equipment | 3.4 | 3.0 | 2.9 | ||||||||||||
Total | $ | 23.5 | $ | 22.0 | $ | 22.7 |
markets transactions, and commissions earned on factoring and related activities.
Transportation & International Finance | North American Commercial Finance | Non-Strategic Portfolios | Corporate & Other | Total CIT | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
For the year ended December 31, 2014 | |||||||||||||||||||||||
Interest income | $ | 289.4 | $ | 832.4 | $ | 90.5 | $ | 14.2 | $ | 1,226.5 | |||||||||||||
Interest expense | (650.4 | ) | (285.4 | ) | (82.1 | ) | (68.3 | ) | (1,086.2 | ) | |||||||||||||
Provision for credit losses | (38.3 | ) | (62.0 | ) | 0.4 | (0.2 | ) | (100.1 | ) | ||||||||||||||
Rental income on operating leases | 1,959.9 | 97.4 | 35.7 | – | 2,093.0 | ||||||||||||||||||
Other income | 69.9 | 318.0 | (57.6 | ) | (24.9 | ) | 305.4 | ||||||||||||||||
Depreciation on operating lease equipment | (519.6 | ) | (81.7 | ) | (14.4 | ) | – | (615.7 | ) | ||||||||||||||
Maintenance and other operating lease expenses | (196.8 | ) | – | – | – | (196.8 | ) | ||||||||||||||||
Operating expenses | (301.9 | ) | (499.7 | ) | (74.6 | ) | (65.6 | ) | (941.8 | ) | |||||||||||||
Loss on debt extinguishment | – | – | – | (3.5 | ) | (3.5 | ) | ||||||||||||||||
Income (loss) from continuing operations before (provision) benefit for income taxes | $ | 612.2 | $ | 319.0 | $ | (102.1 | ) | $ | (148.3 | ) | $ | 680.8 | |||||||||||
Select Period End Balances | |||||||||||||||||||||||
Loans | $ | 3,558.9 | $ | 15,936.0 | $ | 0.1 | $ | – | $ | 19,495.0 | |||||||||||||
Credit balances of factoring clients | – | (1,622.1 | ) | – | – | (1,622.1 | ) | ||||||||||||||||
Assets held for sale | 815.2 | 22.8 | 380.1 | – | 1,218.1 | ||||||||||||||||||
Operating lease equipment, net | 14,665.2 | 265.2 | – | – | 14,930.4 | ||||||||||||||||||
For the year ended December 31, 2013 | |||||||||||||||||||||||
Interest income | $ | 254.9 | $ | 828.6 | $ | 157.2 | $ | 14.5 | $ | 1,255.2 | |||||||||||||
Interest expense | (585.5 | ) | (284.3 | ) | (130.2 | ) | (60.9 | ) | (1,060.9 | ) | |||||||||||||
Provision for credit losses | (18.7 | ) | (35.5 | ) | (10.8 | ) | 0.1 | (64.9 | ) | ||||||||||||||
Rental income on operating leases | 1,682.4 | 104.0 | 111.0 | – | 1,897.4 | ||||||||||||||||||
Other income | 82.2 | 306.5 | (14.6 | ) | 7.2 | 381.3 | |||||||||||||||||
Depreciation on operating lease equipment | (433.3 | ) | (75.1 | ) | (32.2 | ) | – | (540.6 | ) | ||||||||||||||
Maintenance and other operating lease expenses | (163.0 | ) | – | (0.1 | ) | – | (163.1 | ) | |||||||||||||||
Operating expenses | (255.3 | ) | (479.5 | ) | (143.1 | ) | (92.3 | ) | (970.2 | ) | |||||||||||||
Income (loss) from continuing operations before (provision) benefit for income taxes | $ | 563.7 | $ | 364.7 | $ | (62.8 | ) | $ | (131.4 | ) | $ | 734.2 | |||||||||||
Select Period End Balances | |||||||||||||||||||||||
Loans | $ | 3,494.4 | $ | 14,693.1 | $ | 441.7 | $ | – | $ | 18,629.2 | |||||||||||||
Credit balances of factoring clients | – | (1,336.1 | ) | – | – | (1,336.1 | ) | ||||||||||||||||
Assets held for sale | 158.5 | 38.2 | 806.7 | – | 1,003.4 | ||||||||||||||||||
Operating lease equipment, net | 12,778.5 | 240.5 | 16.4 | – | 13,035.4 |
Transportation & International Finance | North American Commercial Finance | Non-Strategic Portfolios | Corporate & Other | Total CIT | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
For the year ended December 31, 2012 | ||||||||||||||||||||||
Interest income | $ | 218.2 | $ | 976.5 | $ | 180.3 | $ | 19.0 | $ | 1,394.0 | ||||||||||||
Interest expense | (1,331.5 | ) | (750.9 | ) | (262.4 | ) | (320.9 | ) | (2,665.7 | ) | ||||||||||||
Provision for credit losses | (14.5 | ) | (44.0 | ) | 7.3 | (0.2 | ) | (51.4 | ) | |||||||||||||
Rental income on operating leases | 1,666.3 | 99.4 | 135.1 | – | 1,900.8 | |||||||||||||||||
Other income | 65.8 | 555.2 | (9.1 | ) | 2.8 | 614.7 | ||||||||||||||||
Depreciation on operating lease equipment | (410.9 | ) | (71.9 | ) | (30.4 | ) | – | (513.2 | ) | |||||||||||||
Maintenance and other operating lease expenses | (139.3 | ) | – | (0.1 | ) | – | (139.4 | ) | ||||||||||||||
Operating expenses | (220.3 | ) | (497.0 | ) | (145.7 | ) | (31.0 | ) | (894.0 | ) | ||||||||||||
Loss on debt extinguishments | – | – | – | (61.2 | ) | (61.2 | ) | |||||||||||||||
Income (loss) from continuing operations before (provision) benefit for income taxes | $ | (166.2 | ) | $ | 267.3 | $ | (125.0 | ) | $ | (391.5 | ) | $ | (415.4 | ) | ||||||||
Select Period End Balances | ||||||||||||||||||||||
Loans | $ | 2,556.5 | $ | 13,084.4 | $ | 1,512.2 | $ | – | $ | 17,153.1 | ||||||||||||
Credit balances of factoring clients | – | (1,256.5 | ) | – | – | (1,256.5 | ) | |||||||||||||||
Assets held for sale | 173.6 | 42.1 | 429.1 | – | 644.8 | |||||||||||||||||
Operating lease equipment, net | 12,178.0 | 150.9 | 82.8 | – | 12,411.7 |
Total Assets (3) | Total Revenue from continuing operations | Income (loss) from continuing operations before benefit (provision) for income taxes | Income (loss) from continuing operations before attribution of noncontrolling interests | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
U.S.(3) | 2014 | $ | 34,985.8 | $ | 2,174.3 | $ | 342.4 | $ | 740.9 | |||||||||||||
2013 | $ | 34,121.0 | $ | 2,201.7 | $ | 374.2 | $ | 354.6 | ||||||||||||||
2012 | $ | 30,829.1 | $ | 2,464.2 | $ | (1,004.3 | ) | $ | (1,046.1 | ) | ||||||||||||
Europe | 2014 | $ | 7,950.5 | $ | 857.7 | $ | 161.2 | $ | 175.4 | |||||||||||||
2013 | $ | 7,679.6 | $ | 807.4 | $ | 167.3 | $ | 121.5 | ||||||||||||||
2012 | $ | 7,274.9 | $ | 822.7 | $ | 224.7 | $ | 195.4 | ||||||||||||||
Other foreign(1) (2) | 2014 | $ | 4,943.7 | $ | 592.9 | $ | 177.2 | $ | 162.4 | |||||||||||||
2013 | $ | 5,338.4 | $ | 524.8 | $ | 192.7 | $ | 174.2 | ||||||||||||||
2012 | $ | 5,908.0 | $ | 622.6 | $ | 364.2 | $ | 318.6 | ||||||||||||||
Total consolidated | 2014 | $ | 47,880.0 | $ | 3,624.9 | $ | 680.8 | $ | 1,078.7 | |||||||||||||
2013 | $ | 47,139.0 | $ | 3,533.9 | $ | 734.2 | $ | 650.3 | ||||||||||||||
2012 | $ | 44,012.0 | $ | 3,909.5 | $ | (415.4 | ) | $ | (532.1 | ) |
(1) | Includes Canada region results which had income before income taxes of $72.6 million in 2014, $79.5 million in 2013 and $164.3 million in 2012 and income before noncontrolling interests of $57.4 million in 2014, $69.2 million in 2013 and $112.0 million in 2012. |
(2) | Includes Caribbean region results which had income before income taxes of $161.0 million in 2014, $103.3 million in 2013 and $203.5 million in 2012 and income before noncontrolling interests of $161.7 million in 2014, $103.4 million in 2013 and $199.7 million in 2012. |
(3) | Includes Assets of discontinued operation of $3,821.4 million at December 31, 2013, and $4,202.6 million at December 31, 2012. The Assets of discontinued operation are in the U.S. There were no Assets of discontinued operation at December 31, 2014. |
Transportation & International Finance | North American Commercial Finance | Non-Strategic Portfolios | Total | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2012 | $ | 183.1 | $ | 151.5 | $ | 11.3 | $ | 345.9 | ||||||||||
Activity | – | – | (11.3 | ) | (11.3 | ) | ||||||||||||
December 31, 2013 | 183.1 | 151.5 | – | 334.6 | ||||||||||||||
Additions, Activity(1) | 68.9 | 167.8 | – | 236.7 | ||||||||||||||
December 31, 2014 | $ | 252.0 | $ | 319.3 | $ | – | $ | 571.3 |
Transportation & International Finance | North American Commercial Finance | Total | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2012 | $ | 31.9 | $ | – | $ | 31.9 | ||||||||
Amortization | (11.6 | ) | – | (11.6 | ) | |||||||||
December 31, 2013 | 20.3 | – | 20.3 | |||||||||||
Additions | (0.4 | ) | 12.3 | 11.9 | ||||||||||
Amortization, other(1) | (6.3 | ) | (0.2 | ) | (6.5 | ) | ||||||||
December 31, 2014 | $ | 13.6 | $ | 12.1 | $ | 25.7 |
Severance | Facilities | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Number of Employees | Liability | Number of Facilities | Liability | Total Liabilities | ||||||||||||||||||
December 31. 2012 | 63 | $ | 7.3 | 16 | $ | 38.8 | $ | 46.1 | ||||||||||||||
Additions and adjustments | 274 | 33.4 | 3 | 3.7 | 37.1 | |||||||||||||||||
Utilization | (212 | ) | (23.0 | ) | (3 | ) | (9.2 | ) | (32.2 | ) | ||||||||||||
December 31. 2013 | 125 | 17.7 | 16 | 33.3 | 51.0 | |||||||||||||||||
Additions and adjustments | 150 | 28.8 | 2 | (2.2 | ) | 26.6 | ||||||||||||||||
Utilization | (228 | ) | (37.8 | ) | (5 | ) | (7.4 | ) | (45.2 | ) | ||||||||||||
December 31, 2014 | 47 | $ | 8.7 | 13 | $ | 23.7 | $ | 32.4 |
December 31, 2014 | December 31, 2013 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Assets: | |||||||||||
Cash and deposits | $ | 1,432.6 | $ | 1,533.5 | |||||||
Cash held at bank subsidiary | 20.3 | 62.0 | |||||||||
Securities purchased under agreements to resell | 650.0 | – | |||||||||
Investment securities | 1,104.2 | 2,096.6 | |||||||||
Receivables from nonbank subsidiaries | 10,735.2 | 12,871.1 | |||||||||
Receivables from bank subsidiaries | 321.5 | 5.6 | |||||||||
Investment in nonbank subsidiaries | 6,600.1 | 6,533.4 | |||||||||
Investment in bank subsidiaries | 2,716.4 | 2,599.6 | |||||||||
Goodwill | 334.6 | 334.6 | |||||||||
Other assets | 1,625.2 | 853.2 | |||||||||
Total Assets | $ | 25,540.1 | $ | 26,889.6 | |||||||
Liabilities and Equity: | |||||||||||
Long-term borrowings | $ | 11,932.4 | $ | 12,531.6 | |||||||
Liabilities to nonbank subsidiaries | 3,924.1 | 4,840.9 | |||||||||
Other liabilities | 614.7 | 678.3 | |||||||||
Total Liabilities | 16,471.2 | 18,050.8 | |||||||||
Total Stockholders’ Equity | 9,068.9 | 8,838.8 | |||||||||
Total Liabilities and Equity | $ | 25,540.1 | $ | 26,889.6 |
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Income | |||||||||||||||
Interest income from nonbank subsidiaries | $ | 560.3 | $ | 636.6 | $ | 737.6 | |||||||||
Interest and dividends on interest bearing deposits and investments | 1.4 | 2.0 | 2.6 | ||||||||||||
Dividends from nonbank subsidiaries | 526.8 | 551.1 | 834.0 | ||||||||||||
Other income from subsidiaries | (23.0 | ) | 50.8 | 181.0 | |||||||||||
Other income | 103.8 | (4.6 | ) | (37.7 | ) | ||||||||||
Total income | 1,169.3 | 1,235.9 | 1,717.5 | ||||||||||||
Expenses | |||||||||||||||
Interest expense | (649.6 | ) | (686.9 | ) | (2,345.9 | ) | |||||||||
Interest expense on liabilities to subsidiaries | (166.4 | ) | (199.6 | ) | (293.6 | ) | |||||||||
Other expenses | (199.4 | ) | (220.4 | ) | (242.3 | ) | |||||||||
Total expenses | (1,015.4 | ) | (1,106.9 | ) | (2,881.8 | ) | |||||||||
Income (loss) before income taxes and equity in undistributed net income of subsidiaries | 153.9 | 129.0 | (1,164.3 | ) | |||||||||||
Benefit for income taxes | 769.6 | 367.9 | 482.2 | ||||||||||||
Income (loss) before equity in undistributed net income of subsidiaries | 923.5 | 496.9 | (682.1 | ) | |||||||||||
Equity in undistributed net income of bank subsidiaries | 83.8 | 95.9 | 41.3 | ||||||||||||
Equity in undistributed net income of nonbank subsidiaries | 122.7 | 82.9 | 48.5 | ||||||||||||
Net income (loss) | 1,130.0 | 675.7 | (592.3 | ) | |||||||||||
Other Comprehensive income (loss), net of tax | (60.3 | ) | 4.1 | 4.9 | |||||||||||
Comprehensive income (loss) | $ | 1,069.7 | $ | 679.8 | $ | (587.4 | ) |
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | 2012 | |||||||||||||
Cash Flows From Operating Activities: | |||||||||||||||
Net income (loss) | $ | 1,130.0 | $ | 675.7 | $ | (592.3 | ) | ||||||||
Equity in undistributed earnings of subsidiaries | (206.5 | ) | (178.8 | ) | (89.8 | ) | |||||||||
Other operating activities, net | (735.4 | ) | (88.2 | ) | 1,524.3 | ||||||||||
Net cash flows provided by operations | 188.1 | 408.7 | 842.2 | ||||||||||||
Cash Flows From Investing Activities: | |||||||||||||||
(Increase) decrease in investments and advances to subsidiaries | (92.6 | ) | 21.0 | 4,053.1 | |||||||||||
Decrease (Increase) in Investment securities | 342.3 | (1,346.2 | ) | 89.1 | |||||||||||
Net cash flows provided by (used in) investing activities | 249.7 | (1,325.2 | ) | 4,142.2 | |||||||||||
Cash Flows From Financing Activities: | |||||||||||||||
Proceeds from the issuance of term debt | 991.3 | 735.2 | 9,750.0 | ||||||||||||
Repayments of term debt | (1,603.0 | ) | (60.5 | ) | (15,239.8 | ) | |||||||||
Repurchase of common stock | (775.5 | ) | (193.4 | ) | – | ||||||||||
Dividends paid | (95.3 | ) | (20.1 | ) | – | ||||||||||
Net change in liabilities to subsidiaries | 902.1 | 728.2 | (1,139.5 | ) | |||||||||||
Net cash flows (used in) provided by financing activities | (580.4 | ) | 1,189.4 | (6,629.3 | ) | ||||||||||
Net (decrease) increase in unrestricted cash and cash equivalents | (142.6 | ) | 272.9 | (1,644.9 | ) | ||||||||||
Unrestricted cash and cash equivalents, beginning of period | 1,595.5 | 1,322.6 | 2,967.5 | ||||||||||||
Unrestricted cash and cash equivalents, end of period | $ | 1,452.9 | $ | 1,595.5 | $ | 1,322.6 |
NOTE 29 — SELECTED QUARTERLY FINANCIAL DATA
Unaudited | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Fourth Quarter | Third Quarter | Second Quarter | First Quarter | ||||||||||||||||
For the year ended December 31, 2014 | |||||||||||||||||||
Interest income | $ | 306.2 | $ | 308.3 | $ | 309.8 | $ | 302.2 | |||||||||||
Interest expense | (276.9 | ) | (275.2 | ) | (262.2 | ) | (271.9 | ) | |||||||||||
Provision for credit losses | (15.0 | ) | (38.2 | ) | (10.2 | ) | (36.7 | ) | |||||||||||
Rental income on operating leases | 546.5 | 535.0 | 519.6 | 491.9 | |||||||||||||||
Other income | 116.4 | 24.2 | 93.7 | 71.1 | |||||||||||||||
Depreciation on operating lease equipment | (153.2 | ) | (156.4 | ) | (157.3 | ) | (148.8 | ) | |||||||||||
Maintenance and other operating lease expenses | (49.7 | ) | (46.5 | ) | (49.0 | ) | (51.6 | ) | |||||||||||
Operating expenses | (248.8 | ) | (234.5 | ) | (225.0 | ) | (233.5 | ) | |||||||||||
Loss on debt extinguishment | (3.1 | ) | – | (0.4 | ) | – | |||||||||||||
Benefit (provision) for income taxes | 28.3 | 401.2 | (18.1 | ) | (13.5 | ) | |||||||||||||
Net income attributable to noncontrolling interests, after tax | 1.3 | (2.5 | ) | (5.7 | ) | 5.7 | |||||||||||||
Income (loss) from discontinued operation, net of taxes | (1.0 | ) | (0.5 | ) | 51.7 | 2.3 | |||||||||||||
Net income | $ | 251.0 | $ | 514.9 | $ | 246.9 | $ | 117.2 | |||||||||||
Net income per diluted share | $ | 1.37 | $ | 2.76 | $ | 1.29 | $ | 0.59 | |||||||||||
For the year ended December 31, 2013 | |||||||||||||||||||
Interest income | $ | 307.2 | $ | 306.4 | $ | 319.1 | $ | 322.5 | |||||||||||
Interest expense | (267.5 | ) | (256.7 | ) | (262.6 | ) | (274.1 | ) | |||||||||||
Provision for credit losses | (14.4 | ) | (16.4 | ) | (14.6 | ) | (19.5 | ) | |||||||||||
Rental income on operating leases | 463.8 | 472.9 | 484.3 | 476.4 | |||||||||||||||
Other income | 127.6 | 104.5 | 79.2 | 70.0 | |||||||||||||||
Depreciation on operating lease equipment | (139.5 | ) | (134.2 | ) | (133.6 | ) | (133.3 | ) | |||||||||||
Maintenance and other operating lease expenses | (39.0 | ) | (41.4 | ) | (40.3 | ) | (42.4 | ) | |||||||||||
Operating expenses | (284.4 | ) | (228.8 | ) | (226.1 | ) | (230.9 | ) | |||||||||||
Provision for income taxes | (28.6 | ) | (13.2 | ) | (29.3 | ) | (12.8 | ) | |||||||||||
Net income attributable to noncontrolling interests, after tax | (2.2 | ) | (0.2 | ) | (0.5 | ) | (3.0 | ) | |||||||||||
Income from discontinued operation, net of taxes | 6.9 | 6.7 | 8.0 | 9.7 | |||||||||||||||
Net income | $ | 129.9 | $ | 199.6 | $ | 183.6 | $ | 162.6 | |||||||||||
Net income per diluted share | $ | 0.65 | $ | 0.99 | $ | 0.91 | $ | 0.81 |
Item 9. Changes in and Disagreements with Accountants on Accounting and
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
Item 15. Exhibits and Financial Statement Schedules
(a) | The following documents are filed with the Securities and Exchange Commission as part of this report (seeItem 8): |
1. | The following financial statements of CIT and Subsidiaries: Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets at December 31, 2014 and December 31, 2013. Consolidated Statements of Operations for the years ended December 31, 2014, 2013 and 2012. Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2014, 2013 and 2012. Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012. Notes to Consolidated Financial Statements. |
2. | All schedules are omitted because they are not applicable or because the required information appears in the Consolidated Financial Statements or the notes thereto. |
(b) | 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). | |||
3.1 | Third Amended and Restated Certificate of Incorporation of the Company, dated December 8, 2009 (incorporated by reference to Exhibit 3.1 to Form 8-K filed December 9, 2009). | |||
3.2 | Amended and Restated By-laws of the Company, as amended through July 15, 2014 (incorporated by reference to Exhibit 99.1 to Form 8-K filed July 16, 2014). | |||
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 | Framework Agreement, dated July 11, 2008, among ABN AMRO Bank N.V., as arranger, Madeleine Leasing Limited, as initial borrower, CIT Aerospace International, as initial head lessee, and CIT Group Inc., as guarantor, as amended by the Deed of Amendment, dated July 19, 2010, among The Royal Bank of Scotland N.V. (f/k/a ABN AMRO Bank N.V.), as arranger, Madeleine Leasing Limited, as initial borrower, CIT Aerospace International, as initial head lessee, and CIT Group Inc., as guarantor, as supplemented by Letter Agreement No. 1 of 2010, dated July 19, 2010, among The Royal Bank of Scotland N.V., as arranger, CIT Aerospace International, as head lessee, and CIT Group Inc., as guarantor, as amended and supplemented by the Accession Deed, dated July 21, 2010, among The Royal Bank of Scotland N.V., as arranger, Madeleine Leasing Limited, as original borrower, and Jessica Leasing Limited, as acceding party, as supplemented by Letter Agreement No. 2 of 2010, dated July 29, 2010, among The Royal Bank of Scotland N.V., as arranger, CIT Aerospace International, as head lessee, and CIT Group Inc., as guarantor, relating to certain Export Credit Agency sponsored secured financings of aircraft and related assets (incorporated by reference to Exhibit 4.11 to Form 10-K filed March 10, 2011). | |||
4.3 | Form of All Parties Agreement among CIT Aerospace International, as head lessee, Madeleine Leasing Limited, as borrower and lessor, CIT Group Inc., as guarantor, various financial institutions, as original ECA lenders, ABN AMRO Bank N.V., Paris Branch, as French national agent, ABN AMRO Bank N.V., Niederlassung Deutschland, as German national agent, ABN AMRO Bank N.V., London Branch, as British national agent, ABN AMRO Bank N.V., London Branch, as ECA facility agent, ABN AMRO Bank N.V., London Branch, as security trustee, and CIT Aerospace International, as servicing agent, relating to certain Export Credit Agency sponsored secured financings of aircraft and related assets during the 2008 and 2009 fiscal years (incorporated by reference to Exhibit 4.12 to Form 10-K filed March 10, 2011). | |||
4.4 | Form of ECA Loan Agreement among Madeleine Leasing Limited, as borrower, various financial institutions, as original ECA lenders, ABN AMRO Bank N.V., Paris Branch, as French national agent, ABN AMRO Bank N.V., Niederlassung Deutschland, as German national agent, ABN AMRO Bank N.V., London Branch, as British national agent, ABN AMRO Bank N.V., London Branch, as ECA facility agent, ABN AMRO Bank N.V., London Branch, as security trustee, and CIT Aerospace International, as servicing agent, relating to certain Export Credit Agency sponsored secured financings of aircraft and related assets during the 2008 and 2009 fiscal years (incorporated by reference to Exhibit 4.13 to Form 10-K filed March 10, 2011). | |||
4.5 | Form of Aircraft Head Lease between Madeleine Leasing Limited, as lessor, and CIT Aerospace International, as head lessee, relating to certain Export Credit Agency sponsored secured financings of aircraft and related assets during the 2008 and 2009 fiscal years (incorporated by reference to Exhibit 4.14 to Form 10-K filed March 10, 2011). |
4.6 | Form of Proceeds and Intercreditor Deed among Madeleine Leasing Limited, as borrower and lessor, various financial institutions, ABN AMRO Bank N.V., Paris Branch, as French national agent, ABN AMRO Bank N.V., Niederlassung Deutschland, as German national agent, ABN AMRO Bank N.V., London Branch, as British national agent, ABN AMRO Bank N.V., London Branch, as ECA facility agent, ABN AMRO Bank N.V., London Branch, as security trustee, relating to certain Export Credit Agency sponsored secured financings of aircraft and related assets during the 2008 and 2009 fiscal years (incorporated by reference to Exhibit 4.15 to Form 10-K filed March 10, 2011). | |||
4.7 | Form of All Parties Agreement among CIT Aerospace International, as head lessee, Jessica Leasing Limited, as borrower and lessor, CIT Group Inc., as guarantor, various financial institutions, as original ECA lenders, Citibank International plc, as French national agent, Citibank International plc, as German national agent, Citibank International plc, as British national agent, The Royal Bank of Scotland N.V., London Branch, as ECA facility agent, The Royal Bank of Scotland N.V., London Branch, as security trustee, CIT Aerospace International, as servicing agent, and Citibank, N.A., as administrative agent, relating to certain Export Credit Agency sponsored secured financings of aircraft and related assets during the 2010 fiscal year (incorporated by reference to Exhibit 4.16 to Form 10-K filed March 10, 2011). | |||
4.8 | Form of ECA Loan Agreement among Jessica Leasing Limited, as borrower, various financial institutions, as original ECA lenders, Citibank International plc, as French national agent, Citibank International plc, as German national agent, Citibank International plc, as British national agent, The Royal Bank of Scotland N.V., London Branch, as ECA facility agent, The Royal Bank of Scotland N.V., London Branch, as security trustee, and Citibank, N.A., as administrative agent, relating to certain Export Credit Agency sponsored secured financings of aircraft and related assets during the 2010 fiscal year (incorporated by reference to Exhibit 4.17 to Form 10-K filed March 10, 2011). | |||
4.9 | Form of Aircraft Head Lease between Jessica Leasing Limited, as lessor, and CIT Aerospace International, as head lessee, relating to certain Export Credit Agency sponsored secured financings of aircraft and related assets during the 2010 fiscal year (incorporated by reference to Exhibit 4.18 to Form 10-K filed March 10, 2011). | |||
4.10 | Form of Proceeds and Intercreditor Deed among Jessica Leasing Limited, as borrower and lessor, various financial institutions, as original ECA lenders, Citibank International plc, as French national agent, Citibank International plc, as German national agent, Citibank International plc, as British national agent, The Royal Bank of Scotland N.V., London Branch, as ECA facility agent, The Royal Bank of Scotland N.V., London Branch, as security trustee, and Citibank, N.A., as administrative agent, relating to certain Export Credit Agency sponsored secured financings of aircraft and related assets during the 2010 fiscal year (incorporated by reference to Exhibit 4.19 to Form 10-K filed March 10, 2011). | |||
4.11 | Indenture, dated as of March 30, 2011, between CIT Group Inc. and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit 4.1 to Form 8-K filed June 30, 2011). | |||
4.12 | First Supplemental Indenture, dated as of March 30, 2011, between CIT Group Inc., the Guarantors named therein, and Deutsche Bank Trust Company Americas, as trustee (including the Form of 5.250% Note due 2014 and the Form of 6.625% Note due 2018) (incorporated by reference to Exhibit 4.2 to Form 8-K filed June 30, 2011). | |||
4.13 | Third Supplemental Indenture, dated as of February 7, 2012, between CIT Group Inc., the Guarantors named therein, and Deutsche Bank Trust Company Americas, as trustee (including the Form of Notes) (incorporated by reference to Exhibit 4.4 of Form 8-K dated February 13, 2012). | |||
4.14 | Registration Rights Agreement, dated as of February 7, 2012, among CIT Group Inc., the Guarantors named therein, and JP Morgan Securities LLC, as representative for the initial purchasers named therein (incorporated by reference to Exhibit 10.1 of Form 8-K dated February 13, 2012). | |||
4.15 | Amended and Restated Revolving Credit and Guaranty Agreement, dated as of January 27, 2014 among CIT Group Inc., certain subsidiaries of CIT Group Inc., as Guarantors, the Lenders party thereto from time to time and Bank of America, N.A., as Administrative Agent and L/C Issuer (incorporated by reference to Exhibit 10.1 to Form 8-K filed January 28, 2014). | |||
4.16 | Indenture, dated as of March 15, 2012, among CIT Group Inc., Wilmington Trust, National Association, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, security registrar and authenticating agent (incorporated by reference to Exhibit 4.1 of Form 8-K filed March 16, 2012). | |||
4.17 | First Supplemental Indenture, dated as of March 15, 2012, among CIT Group Inc., Wilmington Trust, National Association, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, security registrar and authenticating agent (including the Form of 5.25% Senior Unsecured Note due 2018) (incorporated by reference to Exhibit 4.2 of Form 8-K filed March 16, 2012). |
4.18 | Second Supplemental Indenture, dated as of May 4, 2012, among CIT Group Inc., Wilmington Trust, National Association, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, security registrar and authenticating agent (including the Form of 5.000% Senior Unsecured Note due 2017 and the Form of 5.375% Senior Unsecured Note due 2020) (incorporated by reference to Exhibit 4.2 of Form 8-K filed May 4, 2012). | |||
4.19 | Third Supplemental Indenture, dated as of August 3, 2012, among CIT Group Inc., Wilmington Trust, National Association, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, security registrar and authenticating agent (including the Form of 4.25% Senior Unsecured Note due 2017 and the Form of 5.00% Senior Unsecured Note due 2022) (incorporated by reference to Exhibit 4.2 to Form 8-K filed August 3, 2012). | |||
4.20 | Fourth Supplemental Indenture, dated as of August 1, 2013, among CIT Group Inc., Wilmington Trust, National Association, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, security registrar and authenticating agent (including the Form of 5.00% Senior Unsecured Note due 2023) (incorporated by reference to Exhibit 4.2 to Form 8-K filed August 1, 2013). | |||
4.21 | Fifth Supplemental Indenture, dated as of February 19, 2014, among CIT Group Inc., Wilmington Trust, National Association, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, security registrar and authenticating agent (including the Form of 3.875% Senior Unsecured Note due 2019) (incorporated by reference to Exhibit 4.2 to Form 8-K filed February 19, 2014). | |||
10.1* | Amended and Restated CIT Group Inc. Long-Term Incentive Plan (as amended and restated effective December 10, 2009) (incorporated by reference to Exhibit 4.1 to Form S-8 filed January 11, 2010). | |||
10.2* | CIT Group Inc. Supplemental Retirement Plan (As Amended and Restated Effective as of January 1, 2008) (incorporated by reference to Exhibit 10.27 to Form 10-Q filed May 12, 2008). | |||
10.3* | CIT Group Inc. Supplemental Savings Plan (As Amended and Restated Effective as of January 1, 2008) (incorporated by reference to Exhibit 10.28 to Form 10-Q filed May 12, 2008). | |||
10.4* | New Executive Retirement Plan of CIT Group Inc. (As Amended and Restated as of January 1, 2008) (incorporated by reference to Exhibit 10.29 to Form 10-Q filed May 12, 2008). | |||
10.5* | Form of CIT Group Inc. Three Year Stock Salary Award Agreement, dated February 8, 2010 (incorporated by reference to Exhibit 10.2 to Form 8-K filed February 8, 2010). | |||
10.6* | Form of CIT Group Inc. Long-term Incentive Plan Stock Option Award Agreement (One Year Vesting) (incorporated by reference to Exhibit 10.35 to Form 10-Q filed August 9, 2010). | |||
10.7* | Form of CIT Group Inc. Long-term Incentive Plan Stock Option Award Agreement (Three Year Vesting) (incorporated by reference to Exhibit 10.36 to Form 10-Q filed August 9, 2010). | |||
10.8* | Form of CIT Group Inc. Long-term Incentive Plan Restricted Stock Award Agreement (Three Year Vesting) (incorporated by reference to Exhibit 10.38 to Form 10-Q filed August 9, 2010). | |||
10.9* | 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). | |||
10.10* | 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). | |||
10.11* | Amended and Restated Employment Agreement, dated as of May 7, 2008, between CIT Group Inc. and C. Jeffrey Knittel (incorporated by reference to Exhibit 10.35 to Form 10-K filed March 2, 2009). | |||
10.12* | Amendment to Employment Agreement, dated December 22, 2008, between CIT Group Inc. and C. Jeffrey Knittel (incorporated by reference to Exhibit 10.37 to Form 10-K filed March 2, 2009). | |||
10.13* | Form of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (with Good Reason) (incorporated by reference to Exhibit 10.33 of Form 10-Q filed August 9, 2011). | |||
10.14* | Form of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (without Good Reason) (incorporated by reference to Exhibit 10.34 of Form 10-Q filed August 9, 2011). | |||
10.15** | Airbus A320 NEO Family Aircraft Purchase Agreement, dated as of July 28, 2011, between Airbus S.A.S. and C.I.T. Leasing Corporation (incorporated by reference to Exhibit 10.35 of Form 10-Q/A filed February 1, 2012). | |||
10.16** | 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). |
10.17** | Third Amended and Restated Confirmation, dated June 28, 2012, between CIT Financial Ltd. and Goldman Sachs International, and Amended and Restated ISDA Master Agreement Schedule, dated October 26, 2011 between CIT Financial Ltd. and Goldman Sachs International, evidencing a $1.5 billion securities based financing facility (incorporated by reference to Exhibit 10.33 to Form 10-Q filed August 9, 2012). | |||
10.18** | ISDA Master Agreement and Credit Support Annex, each dated June 6, 2008, between CIT Financial Ltd. and Goldman Sachs International related to a $1.5 billion securities based financing facility (incorporated by reference to Exhibit 10.34 to Form 10-Q filed August 11, 2008). | |||
10.19 | Form of CIT Group Inc. Long-Term Incentive Plan Performance Stock Unit Award Agreement (with Good Reason) (incorporated by reference to Exhibit 10.36 to Form 10-Q filed May 10, 2012). | |||
10.20 | Form of CIT Group Inc. Long-Term Incentive Plan Performance Stock Unit Award Agreement (without Good Reason) (incorporated by reference to Exhibit 10.37 to Form 10-Q filed May 10, 2012). | |||
10.21* | Assignment and Extension of Employment Agreement, dated February 6, 2013, by and among CIT Group Inc., C. Jeffrey Knittel and C.I.T. Leasing Corporation (incorporated by reference to Exhibit 10.34 to Form 10-Q filed November 6, 2013). | |||
10.22* | Form of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.36 to Form 10-K filed March 1, 2013). | |||
10.23* | Form of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (Executives with Employment Agreements) (incorporated by reference to Exhibit 10.37 to Form 10-K filed March 1, 2013). | |||
10.24* | 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). | |||
10.25 | 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). | |||
10.26* | Retention Letter Agreement, dated July 21, 2014, between CIT Group Inc. and Nelson Chai and Attached Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.4 to Form 8-K filed July 25, 2014). | |||
10.27* | Extension to Term of Employment Agreement, dated January 2, 2014, between CIT Group Inc. and C. Jeffrey Knittel (incorporated by reference to Exhibit 10.33 to Form 10-Q filed August 6, 2014). | |||
10.28* | Amendment to Employment Agreement, dated July 14, 2014, between CIT Group Inc. and C. Jeffrey Knittel (incorporated by reference to Form 8-K filed July 16, 2014). | |||
10.29* | Extension to Employment Agreement, dated January 16, 2015, between C.I.T. Leasing Corporation and C. Jeffrey Knittel (filed herein). | |||
10.30* | Form of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (with Performance Based Vesting) (2013) (filed herein). | |||
10.31* | Form of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (with Performance-Based Vesting) (2013) (Executives with Employment Agreements) (filed herein). | |||
10.32 | Form of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (with Performance Based Vesting) (2014) (filed herein). | |||
10.33 | Form of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (with Performance Based Vesting) (2014) (Executives with Employment Agreements) (filed herein). | |||
12.1 | CIT Group Inc. and Subsidiaries Computation of Ratio of Earnings to Fixed Charges. | |||
21.1 | Subsidiaries of CIT Group Inc. | |||
23.1 | Consent of PricewaterhouseCoopers LLP. | |||
24.1 | Powers of Attorney. | |||
31.1 | Certification of John A. Thain pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Commission, as promulgated pursuant to Section 13(a) of the Securities Exchange Act and Section 302 of the Sarbanes-Oxley Act of 2002. | |||
31.2 | Certification of Scott T. Parker pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Commission, as promulgated pursuant to Section 13(a) of the Securities Exchange Act and Section 302 of the Sarbanes-Oxley Act of 2002. | |||
32.1*** | Certification of John A. Thain pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2*** | Certification of Scott T. Parker pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||
101.INS | XBRL Instance Document (Includes the following financial information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Operations, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Changes in Stockholders’ Equity and Comprehensive Income, (iv) the Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements.) | |||
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. |
CIT GROUP INC. | ||||
February 20, 2015 | By: /s/ John A. Thain | |||
John A. Thain | ||||
Chairman and Chief Executive Officer and Director |
NAME | NAME | |||
/s/ John A. Thain | Gerald Rosenfeld* | |||
John A. Thain Chairman and Chief Executive Officer and Director | Gerald Rosenfeld Director | |||
Ellen R. Alemany* | Sheila A. Stamps* | |||
Ellen R. Alemany Director | Sheila A. Stamps Director | |||
Michael J. Embler* | Seymour Sternberg* | |||
Michael J. Embler Director | Seymour Sternberg Director | |||
William M. Freeman* | Peter J. Tobin* | |||
William M. Freeman Director | Peter J. Tobin Director | |||
David M. Moffett* | Laura S. Unger* | |||
David M. Moffett Director | Laura S. Unger Director | |||
R. Brad Oates* | /s/ Scott T. Parker | |||
R. Brad Oates Director | Scott T. Parker Executive Vice President and Chief Financial Officer | |||
Marianne Miller Parrs* | /s/ E. Carol Hayles | |||
Marianne Miller Parrs Director | E. Carol Hayles Executive Vice President and Controller | |||
John A. Ryan* | /s/ James P. Shanahan | |||
John R. Ryan Director | James P. Shanahan Senior Vice President, Chief Regulatory Counsel, Attorney-in-Fact |
* | Original powers of attorney authorizing Robert J. Ingato, Christopher H. Paul, and James P. Shanahan and each of them to sign on behalf of the above-mentioned directors are held by the Corporation and available for examination by the Securities and Exchange Commission pursuant to Item 302(b) of Regulation S-T. |