“We posted another quarter of solid financial performance and increased tangible book value per share by 3.6 percent in the second quarter,” said CIT Chairwoman and CEO Ellen R. Alemany. “We continued to advance our strategic plan and delivered growth in core loans and leases, additional optimization of our balance sheet and improved operating efficiency. We remain committed to continued execution of our strategic plan and creating long-term shareholder value.”
Average loans and leases for the quarter were up slightly from the prior and year-ago quarters. Average core loans and leases were up 1% from the prior quarter and 8% from the year-ago quarter. The quarter also saw continued strong origination levels across all core portfolios
The net finance margin of 3.13% was down 7 bps from the prior quarter, primarily reflecting higher average deposit costs, partially offset by lower borrowings.
Other financial highlights from Q2/2019 included:
Deposits constitute 85% of total average fundings, up from 77% in the year-ago quarter; further reduced wholesale debt
Repurchased 3.2 million common shares at an average price of $49.64
Maintained strong credit quality and disciplined underwriting standards
Credit reserves remain strong at 1.56% of total portfolio and 1.89% of Commercial
Other non-interest income increased $9 million from the prior quarter to $106 million, primarily driven by an increase in gains on the sale of loans in Commercial Banking.
Operating expenses, excluding intangible asset amortization, decreased $8 million from the prior quarter to $262 million, driven by lower advertising and marketing costs and lower employee costs.
Net efficiency ratio of 56% improved from 58% in the prior quarter, reflecting the decrease in operating expenses.
Provision for credit losses was $29 million, down from $33 million in the prior quarter.
Net charge-offs of $31 million (0.40% of average loans) included $30 million (0.49% of average loans) in the Commercial Banking segment. Non-accrual loans declined by $26 million to 0.86% of loans.
Effective tax rate of 20% was positively impacted by $9 million in net discrete tax benefits that were primarily from audit settlements with certain state and local tax authorities. Excluding the net discrete tax benefits, the effective tax rate would have been 25%.
Loans and leases to deposit ratio was 93% at CIT Bank and 109% at CIT Group, both relatively unchanged from the prior quarter.
Book value per share of $59.01 increased 3.4% from the prior quarter. Tangible book value per share of $54.29 increased 3.6% from the prior quarter.
CET ratio decreased to 11.6% and reflected the increase in risk-weighted assets from the expiration of a loss share agreement between CIT Bank and the FDIC at the end of the prior quarter.
ROTCE from continuing operations was 10.3%. ROTCE from continuing operations, normalized for the preferred dividend, was 10.7%.
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