CIT Announces Third Quarter 2020 Financial Results

CIT has announced its third-quarter financial results for the year 2020. CIT is a leading National Bank that focuses on empowering personal savers and businesses with the great financial flexibility to achieve their financial goals. The company has about a century of experience.

The following are the highlights of the third quarter financial results of CIT

The Net finance margin of 2.27% was up 13 bps compared to the prior quarter. This is primarily reflecting lower deposit costs in the online and branch channels and a higher mix of lower-cost HOA and commercial deposit channels. The other non-interest income has increased to $146 million, which is $43 million from the prior quarter. This is primarily driven by higher gains on the sale of loans and higher factoring commissions.

The Operating expenses have decreased from $64 million to $296 million. Operating expenses, excluding noteworthy items and intangible assets, decreased $8 million from the prior quarter to $287 million, primarily from lower employee costs partially offset by higher FDIC insurance costs.

Coming to the credit, the net charge-offs of $66 million, was down from $170 million in the prior quarter (which included a $73 million net charge-off relating to a single factoring customer) and provision for credit losses of $63 million, was down from $224 million in the prior quarter.

The Non-accruals has increased by $90 million to $647 million, which included a $31 million increase from the Legacy Consumer Mortgages (LCM) division of the Consumer Banking segment where the loans also carry a notable discount. The remaining increase was in the Commercial Banking segment. Non-accruals are adequately reserved. The Effective tax rate excluding noteworthy items was approximately 26% each.

The Loans and leases to deposit ratio of 89% at CIT Bank and 101% at consolidated CIT Group. The increase in both ratios reflects the decline in deposits in the quarter. The tangible book value per share of $50.29 increased from the prior quarter primarily reflecting net income in the quarter. The CET1 ratio decreased to 9.9%, reflecting an increase in risk-weighted assets (RWAs) primarily due to an increase in off-balance sheet factoring receivables.

The $9 million (after-tax) ($0.09 per diluted common share) value in merger and integration costs related to the MOB acquisition and $9 million (after-tax) ($0.09 per diluted common share) reversal of compensation due to a decrease in the probability of achievement of certain performance conditions related to the Company’s stock-based compensation were the significant highlights of the financial results.

Net finance revenue increased to $328 million compared to $308 million in the prior quarter and the Net finance margin was 2.27%, a 13 bps increase from 2.14% in the prior quarter. The Net finance revenue decreased by $25 million compared to the year-ago quarter. The other non-interest income was $146 million, up from $103 million in the prior quarter due to higher factoring commissions due to higher volumes and pricing caused by the covid-19 pandemic. The lower factoring commissions due to lower volumes were also a result of the covid-19 pandemic.