CIT Group reported net income of $200 million, $0.99 per diluted share, for the third quarter of 2013, compared to a net loss of $299 million, $1.49 per diluted share, for the third quarter of 2012. Net income for the nine month period ended September 30, 2013 was $546 million, $2.70 per diluted share, compared to a net loss of $799 million, $3.98 per diluted share in the prior year. Prior year results include significant debt redemption charges.

“Our third quarter results reflect our progress in prudently growing assets, expanding CIT Bank, and returning capital to our shareholders,” said John Thain, chairman and chief executive officer. “We remain focused on building our franchise as we put our knowledge to work on behalf of our clients, who remain the heart of the U.S. economy.”

The following commentary on Transportation and Vendor Finance was excerpted from the CIT news release:

Transportation Finance

Pre-tax earnings for the quarter were $161 million, up from $135 million in the year-ago quarter reflecting lower interest expense and higher other income, and down from $169 million in the prior quarter due to lower rental income in commercial air partially offset by higher other income. Other income in the current quarter included a $13 million gain on the sale of a workout-related claim. Utilization remained strong with all owned commercial airplanes and 98% of rail equipment on lease or under a commitment at quarter-end.

Financing and leasing assets totaled $14.3 billion at September 30, 2013, up slightly sequentially and $0.3 billion from a year ago. During the quarter we sold six aircraft for a gain and took delivery of five new aircraft and approximately 1,500 railcars.

During the quarter we agreed to purchase 13 new Airbus aircraft that are conditional upon lease to American Airlines with delivery dates through 2014, and exercised cancellation rights on 13 Embraer aircraft previously scheduled for delivery in 2015. All but two aircraft scheduled for delivery in the next twelve months, and approximately 75% of all railcars on order, have lease commitments. A higher than usual number of aircraft will be subject to lease renewals in 2014, which could put pressure on the finance margin.

Vendor Finance

Pre-tax earnings for the quarter were $8 million, which continued to be impacted by the international platform rationalization efforts, compared to $12 million in the year-ago period and $6 million in the prior quarter. The decline from the year-ago quarter reflects higher credit costs and lower net FSA accretion, which more than offset $5 million of net gains in the current quarter. Income related to the Dell Europe portfolio, including a $21 million gain on the sale of the first tranche, was largely offset by impairments on assets transferred to assets held for sale. Other income in the prior quarter included $6 million of costs related to international platform rationalizations. The sequential quarter comparison also reflected a reduction in net finance income related to the Dell Europe asset sale as those assets had high yields and the operating lease component had no associated depreciation expense.

Financing and leasing assets declined modestly from June 30, 2013 to $5.6 billion and rose 7% from a year ago. Approximately $200 million of the Dell Europe portfolio was sold during the third quarter and the remainder, about $300 million, was sold on October 1, 2013. Assets held for sale increased to $555 million, primarily reflecting the transfer of assets in several European countries. We funded $761 million of new business volume in the quarter, an increase of 8% from the year-ago quarter, but down 10% from the prior quarter reflecting seasonality.

Credit metrics were also impacted by the platform rationalization efforts. Net charge-offs of $19 million included $7 million of charge-offs related to loans transferred to assets held for sale as well as lower recoveries. Absent these transfers, net charge-offs were generally stable from both the year-ago and prior quarters. Non-accrual loans were $96 million (1.98% of finance receivables) at quarter-end, compared to $74 million (1.59%) a year ago and $90 million (1.82%) at June 30, 2013.

To read the full text of the CIT news release click here.