CIT Group posts wider 3Q loss on debt refinancing
NEW YORK (AP) — CIT Group Inc. on Tuesday posted a wider-than-expected third-quarter loss as the commercial lender spent more to pay down high-cost debt than it did in the year-ago period.
CIT Group's loss amounted to $304.9 million, or $1.52 per share, for the three months ended Sept. 30, compared with a loss of $32.8 million, or 16 cents per share, in the same quarter last year.
Analysts surveyed by FactSet had expected a narrower loss of $1.23 per share for the most recent quarter.
The latest results included $471 million in debt-refinancing charges related to the prepayment of $4.6 billion of high-cost debt, while the year-ago quarter included $169 million in debt-refinancing charges.
Excluding those charges, CIT Group said its pretax income fell slightly in the latest quarter to $170 million from $176 million a year ago.
John Thain, chairman and CEO of the New York-based company, said CIT Group eliminated the last of its $31 billion of restructuring-related debt during the latest quarter. High-cost debt has either been eliminated or refinanced since 2010.
"We achieved several strategic milestones this quarter that will lower our funding costs and better position CIT for future profitability," Thain said.
CIT Group filed for bankruptcy protection in 2009. It restructured its debt quickly and emerged that December, but was still weighed down by billions in high-cost debt.
The company provides financing and leasing for small and midsized companies. It helps retailers pay for inventory and offers import and export financing, among other services.
During the latest quarter, total interest income fell nearly 26 percent to $374.1 million. Total interest expense grew nearly 35 percent to $812.1 million, primarily due to costs from debt restructuring.
There was no provision for credit losses in the latest quarter, compared with the $47 million provision in the year-ago period. Net charge-offs, or loans the company doesn't expect to collect on, fell to $18 million from $46 million.
Total non-interest income, or income from fees and other sources, fell 19 percent to $525.6 million.
CIT Group reported total assets of $43.6 billion as of Sept. 30, up about $800 million from three months earlier, but down from $44.6 billion a year ago. The company said growth in its commercial loan portfolio was offset by sales and runoff of more than $3 billion of government-guaranteed student loans over the past 12 months.
Funded new business volume increased 16 percent from a year ago, to $2.2 billion.
CIT Group shares closed at $40.02 on Monday. The stock is up nearly 15 percent this year, but down from its 52-week high of $43.35 on March 19. Shares traded as low as $29.98 in November.