Washington, D.C. 20549
|X| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2016 | | | 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 Number) | |||||
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) |
Yes |X| No |_|
Item 1. | 2 | |||||||
2 | ||||||||
3 | ||||||||
4 | ||||||||
5 | ||||||||
6 | ||||||||
7 | ||||||||
Item 2. | 70 | |||||||
and | ||||||||
Item 3. | 70 | |||||||
Item 4. | 131 | |||||||
Item 1. | 133 | |||||||
Item 1A. | 133 | |||||||
Item 2. | 133 | |||||||
Item 4. | 133 | |||||||
Item 6. | 134 | |||||||
139 |
CIT GROUP INC. AND SUBSIDIARIES
September 30, 2016 | December 31, 2015 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Assets | ||||||||||
Cash and due from banks, including restricted balances of $239.2 and $601.4 at September 30, 2016 and December 31, 2015(1), respectively (see Note 8 for amounts pledged) | $ | 920.5 | $ | 1,481.2 | ||||||
Interest bearing deposits, including restricted balances of $614.1 and $229.5 at September 30, 2016 and December 31, 2015(1), respectively (see Note 8 for amounts pledged) | 6,513.1 | 6,820.3 | ||||||||
Investment securities, including securities carried at fair value with changes recorded in net income of $301.3 and $339.7 at September 30, 2016 and December 31, 2015, respectively (see Note 8 for amounts pledged) | 3,592.4 | 2,953.8 | ||||||||
Assets held for sale(1) | 2,462.1 | 2,092.4 | ||||||||
Loans (see Note 8 for amounts pledged) | 29,918.2 | 31,671.7 | ||||||||
Allowance for loan losses | (421.7 | ) | (360.2 | ) | ||||||
Total loans, net of allowance for loan losses(1) | 29,496.5 | 31,311.5 | ||||||||
Operating lease equipment, net (see Note 8 for amounts pledged)(1) | 16,954.8 | 16,617.0 | ||||||||
Indemnification assets | 362.2 | 414.8 | ||||||||
Unsecured counterparty receivable | 560.2 | 537.8 | ||||||||
Goodwill | 1,170.5 | 1,198.3 | ||||||||
Intangible assets | 161.3 | 176.3 | ||||||||
Other assets, including $174.3 and $195.9 at September 30, 2016 and December 31, 2015, respectively, at fair value | 3,319.0 | 3,297.6 | ||||||||
Assets of discontinued operations | 452.9 | 500.5 | ||||||||
Total Assets | $ | 65,965.5 | $ | 67,401.5 | ||||||
Liabilities | ||||||||||
Deposits | $ | 32,854.3 | $ | 32,782.2 | ||||||
Credit balances of factoring clients | 1,228.9 | 1,344.0 | ||||||||
Other liabilities, including $263.7 and $221.3 at September 30, 2016 and December 31, 2015, respectively, at fair value | 3,168.3 | 3,158.7 | ||||||||
Borrowings, including $3,977.3 and $3,361.2 contractually due within twelve months at September 30, 2016 and December 31, 2015, respectively | 16,548.7 | 18,441.8 | ||||||||
Liabilities of discontinued operations | 927.8 | 696.2 | ||||||||
Total Liabilities | 54,728.0 | 56,422.9 | ||||||||
Stockholders’ Equity | ||||||||||
Common stock: $0.01 par value, 600,000,000 authorized | ||||||||||
Issued: 206,140,114 and 204,447,769 at September 30, 2016 and December 31, 2015, respectively | 2.1 | 2.0 | ||||||||
Outstanding: 202,047,304 and 201,021,508 at September 30, 2016 and December 31, 2015, respectively | ||||||||||
Paid-in capital | 8,758.2 | 8,718.1 | ||||||||
Retained earnings | 2,758.9 | 2,557.4 | ||||||||
Accumulated other comprehensive loss | (104.2 | ) | (142.1 | ) | ||||||
Treasury stock: 4,092,810 and 3,426,261 shares at September 30, 2016 and December 31, 2015 at cost, respectively | (178.0 | ) | (157.3 | ) | ||||||
Total Common Stockholders’ Equity | 11,237.0 | 10,978.1 | ||||||||
Noncontrolling minority interests | 0.5 | 0.5 | ||||||||
Total Equity | 11,237.5 | 10,978.6 | ||||||||
Total Liabilities and Equity | $ | 65,965.5 | $ | 67,401.5 |
(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 interests 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 | $ | 267.9 | $ | 314.2 | |||||||
Assets held for sale | – | 279.7 | |||||||||
Total loans, net of allowance for loan losses | 2,061.9 | 2,218.6 | |||||||||
Operating lease equipment, net | 3,723.6 | 3,985.9 | |||||||||
Other | – | 11.2 | |||||||||
Total Assets | $ | 6,053.4 | $ | 6,809.6 | |||||||
Liabilities | |||||||||||
Beneficial interests issued by consolidated VIEs (classified as long-term borrowings) | $ | 3,061.2 | $ | 4,084.8 | |||||||
Total Liabilities | $ | 3,061.2 | $ | 4,084.8 |
CIT GROUP INC. AND SUBSIDIARIES
Quarters Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Interest income | ||||||||||||||||||
Interest and fees on loans | $ | 457.6 | $ | 414.2 | $ | 1,385.7 | $ | 961.4 | ||||||||||
Other interest and dividends | 32.5 | 23.5 | 95.1 | 41.1 | ||||||||||||||
Interest income | 490.1 | 437.7 | 1,480.8 | 1,002.5 | ||||||||||||||
Interest expense | ||||||||||||||||||
Interest on borrowings | (180.0 | ) | (190.6 | ) | (550.0 | ) | (585.9 | ) | ||||||||||
Interest on deposits | (99.4 | ) | (89.7 | ) | (298.3 | ) | (230.9 | ) | ||||||||||
Interest expense | (279.4 | ) | (280.3 | ) | (848.3 | ) | (816.8 | ) | ||||||||||
Net interest revenue | 210.7 | 157.4 | 632.5 | 185.7 | ||||||||||||||
Provision for credit losses | (46.2 | ) | (49.9 | ) | (173.6 | ) | (102.9 | ) | ||||||||||
Net interest revenue, after credit provision | 164.5 | 107.5 | 458.9 | 82.8 | ||||||||||||||
Non-interest income | ||||||||||||||||||
Rental income on operating leases | 563.6 | 539.3 | 1,708.3 | 1,601.6 | ||||||||||||||
Other income | 73.9 | 39.2 | 279.1 | 189.1 | ||||||||||||||
Total non-interest income | 637.5 | 578.5 | 1,987.4 | 1,790.7 | ||||||||||||||
Total revenue, net of interest expense and credit provision | 802.0 | 686.0 | 2,446.3 | 1,873.5 | ||||||||||||||
Non-interest expenses | ||||||||||||||||||
Depreciation on operating lease equipment | (179.1 | ) | (159.1 | ) | (530.8 | ) | (473.7 | ) | ||||||||||
Maintenance and other operating lease expenses | (60.4 | ) | (55.9 | ) | (181.5 | ) | (151.4 | ) | ||||||||||
Operating expenses | (332.0 | ) | (333.9 | ) | (1,018.0 | ) | (810.5 | ) | ||||||||||
Loss on debt extinguishment and deposit redemption | (5.1 | ) | (0.3 | ) | (10.8 | ) | (0.4 | ) | ||||||||||
Total non-interest expenses | (576.6 | ) | (549.2 | ) | (1,741.1 | ) | (1,436.0 | ) | ||||||||||
Income from continuing operations before provision for income taxes | 225.4 | 136.8 | 705.2 | 437.5 | ||||||||||||||
(Provision) benefit for income taxes | (77.0 | ) | 560.0 | (224.0 | ) | 478.2 | ||||||||||||
Income from continuing operations, before attribution of noncontrolling interests | 148.4 | 696.8 | 481.2 | 915.7 | ||||||||||||||
Loss attributable to noncontrolling interests, after tax | – | – | – | 0.1 | ||||||||||||||
Income from continuing operations | 148.4 | 696.8 | 481.2 | 915.8 | ||||||||||||||
Discontinued Operations | ||||||||||||||||||
Loss from discontinued operation, net of taxes | (15.6 | ) | (3.7 | ) | (187.4 | ) | (3.7 | ) | ||||||||||
Total loss from discontinued operations, net of tax | (15.6 | ) | (3.7 | ) | (187.4 | ) | (3.7 | ) | ||||||||||
Net Income | $ | 132.8 | $ | 693.1 | $ | 293.8 | $ | 912.1 | ||||||||||
Basic income per common share | ||||||||||||||||||
Income from continuing operations | $ | 0.74 | $ | 3.66 | $ | 2.39 | $ | 5.08 | ||||||||||
Loss from discontinued operation | (0.08 | ) | (0.02 | ) | (0.93 | ) | (0.02 | ) | ||||||||||
Basic income per share | $ | 0.66 | $ | 3.64 | $ | 1.46 | $ | 5.06 | ||||||||||
Diluted income per common share | ||||||||||||||||||
Income from continuing operations | $ | 0.73 | $ | 3.63 | $ | 2.38 | $ | 5.05 | ||||||||||
Loss from discontinued operation | (0.08 | ) | (0.02 | ) | (0.93 | ) | (0.02 | ) | ||||||||||
Diluted income per share | $ | 0.65 | $ | 3.61 | $ | 1.45 | $ | 5.03 | ||||||||||
Average number of common shares (thousands) | ||||||||||||||||||
Basic | 202,036 | 190,557 | 201,775 | 180,300 | ||||||||||||||
Diluted | 202,755 | 191,803 | 202,388 | 181,350 | ||||||||||||||
Dividends declared per common share | $ | 0.15 | $ | 0.15 | $ | 0.45 | $ | 0.45 |
CIT GROUP INC. AND SUBSIDIARIES
Quarters Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Net Income before attribution of noncontrolling interests | $ | 132.8 | $ | 693.1 | $ | 293.8 | $ | 912.0 | ||||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||||
Foreign currency translation adjustments | (2.2 | ) | (8.7 | ) | 16.3 | (33.4 | ) | |||||||||||
Net unrealized gains (losses) on available for sale securities | 5.6 | (6.1 | ) | 20.3 | (5.9 | ) | ||||||||||||
Changes in benefit plans net gain (loss) and prior service (cost)/credit | 0.1 | (0.7 | ) | 1.3 | (1.1 | ) | ||||||||||||
Other comprehensive income (loss), net of tax | 3.5 | (15.5 | ) | 37.9 | (40.4 | ) | ||||||||||||
Comprehensive income before noncontrolling interests | 136.3 | 677.6 | 331.7 | 871.6 | ||||||||||||||
Comprehensive loss attributable to noncontrolling interests | – | – | – | 0.1 | ||||||||||||||
Comprehensive income | $ | 136.3 | $ | 677.6 | $ | 331.7 | $ | 871.7 |
CIT GROUP INC. AND SUBSIDIARIES
Common Stock | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Noncontrolling Minority Interests | Total Equity | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2015 | $ | 2.0 | $ | 8,718.1 | $ | 2,557.4 | $ | (142.1 | ) | $ | (157.3 | ) | $ | 0.5 | $ | 10,978.6 | ||||||||||||||
Net income | – | – | 293.8 | – | – | – | 293.8 | |||||||||||||||||||||||
Other comprehensive income, net of tax | – | – | – | 37.9 | – | – | 37.9 | |||||||||||||||||||||||
Dividends paid | – | – | (92.3 | ) | – | – | – | (92.3 | ) | |||||||||||||||||||||
Amortization of restricted stock, stock option and performance shares expenses | – | 38.2 | – | – | (20.7 | ) | – | 17.5 | ||||||||||||||||||||||
Issuance of common stock | 0.1 | – | – | – | – | – | 0.1 | |||||||||||||||||||||||
Employee stock purchase plan | – | 1.9 | – | – | – | – | 1.9 | |||||||||||||||||||||||
September 30, 2016 | $ | 2.1 | $ | 8,758.2 | $ | 2,758.9 | $ | (104.2 | ) | $ | (178.0 | ) | $ | 0.5 | $ | 11,237.5 | ||||||||||||||
December 31, 2014 | $ | 2.0 | $ | 8,603.6 | $ | 1,615.7 | $ | (133.9 | ) | $ | (1,018.5 | ) | $ | (5.4 | ) | $ | 9,063.5 | |||||||||||||
Net income | – | – | 912.1 | – | – | (0.1 | ) | 912.0 | ||||||||||||||||||||||
Other comprehensive loss, net of tax | – | – | – | (40.4 | ) | – | – | (40.4 | ) | |||||||||||||||||||||
Dividends paid | – | – | (84.4 | ) | – | – | – | (84.4 | ) | |||||||||||||||||||||
Amortization of restricted stock, stock option and performance shares expenses | – | 59.8 | – | – | (22.0 | ) | – | 37.8 | ||||||||||||||||||||||
Issuance of common stock — acquisition | – | 45.6 | – | – | 1,416.4 | – | 1,462.0 | |||||||||||||||||||||||
Repurchase of common stock | – | – | – | – | (531.8 | ) | – | (531.8 | ) | |||||||||||||||||||||
Employee stock purchase plan | – | 1.0 | – | – | – | – | 1.0 | |||||||||||||||||||||||
Purchase of noncontrolling interest and distribution of earnings and capital | – | (26.5 | ) | – | – | – | 6.0 | (20.5 | ) | |||||||||||||||||||||
September 30, 2015 | $ | 2.0 | $ | 8,683.5 | $ | 2,443.4 | $ | (174.3 | ) | $ | (155.9 | ) | $ | 0.5 | $ | 10,799.2 |
CIT GROUP INC. AND SUBSIDIARIES
Nine Months Ended September 30, | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|
2016 | 2015 | |||||||||
Cash Flows From Operations | ||||||||||
Net income | $ | 293.8 | $ | 912.1 | ||||||
Adjustments to reconcile net income to net cash flows from operations: | ||||||||||
Provision for credit losses | 173.6 | 102.9 | ||||||||
Net depreciation, amortization and (accretion) | 598.1 | 582.1 | ||||||||
Net gains on asset sales and impairments on assets held for sale | (58.6 | ) | (34.2 | ) | ||||||
Provision (benefit) for deferred income taxes | 143.1 | (563.6 | ) | |||||||
(Increase) decrease in finance receivables held for sale | 168.1 | (117.1 | ) | |||||||
Net reimbursement of expense from FDIC | 3.1 | 2.2 | ||||||||
Decrease in other assets | 166.0 | 9.7 | ||||||||
Decrease in other liabilities | (5.8 | ) | (100.4 | ) | ||||||
Net cash flows provided by operations | 1,481.4 | 793.7 | ||||||||
Cash Flows From Investing Activities | ||||||||||
Changes in loans, net | 316.8 | (1,134.7 | ) | |||||||
Purchases of investment securities | (3,344.5 | ) | (6,964.8 | ) | ||||||
Proceeds from maturities of investment securities | 2,813.3 | 7,139.2 | ||||||||
Proceeds from asset and receivable sales | 1,182.5 | 1,427.7 | ||||||||
Purchases of assets to be leased and other equipment | (1,382.8 | ) | (1,859.1 | ) | ||||||
Net decrease in short-term factoring receivables | (288.1 | ) | (32.3 | ) | ||||||
Purchases of restricted stock | – | (128.9 | ) | |||||||
Proceeds from redemption of restricted stock | 32.3 | 20.0 | ||||||||
Payments to the FDIC under loss share agreements | (2.2 | ) | (17.4 | ) | ||||||
Proceeds from the FDIC under loss share agreements and participation agreements | 83.9 | 11.3 | ||||||||
Proceeds from sale of OREO, net of repurchases | 103.3 | 24.2 | ||||||||
Acquisition, net of cash received | – | 2,521.2 | ||||||||
Net change in restricted cash | (22.4 | ) | 151.1 | |||||||
Net cash flows (used in) provided by investing activities | (507.9 | ) | 1,157.5 | |||||||
Cash Flows From Financing Activities | ||||||||||
Proceeds from the issuance of term debt | 2.7 | 1,606.5 | ||||||||
Repayments of term debt | (1,320.0 | ) | (3,700.3 | ) | ||||||
Proceeds from FHLB advances | 1,645.5 | 5,164.1 | ||||||||
Repayments of FHLB debt | (2,324.9 | ) | (5,168.8 | ) | ||||||
Net increase in deposits | 80.9 | 1,943.1 | ||||||||
Collection of security deposits and maintenance funds | 270.9 | 236.1 | ||||||||
Use of security deposits and maintenance funds | (118.2 | ) | (127.1 | ) | ||||||
Repurchase of common stock | – | (531.8 | ) | |||||||
Dividends paid | (92.3 | ) | (84.4 | ) | ||||||
Purchase of noncontrolling interest | – | (20.5 | ) | |||||||
Payments on affordable housing investment credits | (8.4 | ) | (0.2 | ) | ||||||
Net cash flows used in financing activities | (1,863.8 | ) | (683.3 | ) | ||||||
(Decrease) Increase in unrestricted cash and cash equivalents | (890.3 | ) | 1,267.9 | |||||||
Unrestricted cash and cash equivalents, beginning of period | 7,470.6 | 6,155.5 | ||||||||
Unrestricted cash and cash equivalents, end of period | $ | 6,580.3 | $ | 7,423.4 | ||||||
Supplementary Cash Flow Disclosure | ||||||||||
Interest paid | $ | (902.9 | ) | $ | (859.3 | ) | ||||
Federal, foreign, state and local income taxes refunded (paid), net | $ | 49.9 | $ | (26.4 | ) | |||||
Supplementary Non Cash Flow Disclosure | ||||||||||
Transfer of assets from held for investment to held for sale | $ | 2,020.5 | $ | 2,049.0 | ||||||
Transfer of assets from held for sale to held for investment | $ | 91.0 | $ | 93.1 | ||||||
Deposits on flight equipment purchases applied to acquisition of flight equipment purchases, and origination of finance leases, capitalized interest, and buyer furnished equipment | $ | 210.4 | $ | 288.1 | ||||||
Transfers of assets from held for investment to OREO | $ | 71.6 | $ | 26.4 | ||||||
Issuance of common stock as consideration | $ | – | $ | 1,462.0 |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
n | ASU 2014-12,Compensation — Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period; |
n | ASU 2015-01,Income Statement — Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items; |
n | ASU 2015-02,Consolidation (Topic 810): Amendments to the Consolidation Analysis; |
n | ASU 2015-03,Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs; and |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
n | ASU 2015-15,Interest-Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting. |
n | More limited partnerships and similar entities will be evaluated for consolidation under the revised consolidation requirements that apply to VIEs. |
n | Fees paid to a decision maker or service provider are less likely to be considered a variable interest in a VIE. |
n | Variable interests in a VIE held by related parties of a reporting enterprise are less likely to require the reporting enterprise to consolidate the VIE. |
n | There is a new approach for determining whether equity at-risk holders of entities that are not similar to limited partnerships have power to direct the entity’s key activities when the entity has an outsourced manager whose fee is a variable interest. |
n | The deferral of consolidation requirements for certain investment companies and similar entities of the VIE in ASU 2009-17 is eliminated. |
n | A new consolidation analysis is required for VIEs, including many limited partnerships and similar entities that previously were not considered VIEs. |
n | It is less likely that the general partner or managing member of limited partnerships and similar entities will be required to consolidate the entity when the other investors in the entity lack both participating rights and kick-out rights. |
n | Limited partnerships and similar entities that are not VIEs will not be consolidated by the general partner. |
n | It is less likely that decision makers or service providers involved with a VIE will be required to consolidate the VIE. |
n | Entities for which decision making rights are conveyed through a contractual arrangement are less likely to be considered VIEs. |
n | Reporting enterprises with interests in certain investment companies and similar entities that are considered VIEs will no longer evaluate those entities for consolidation based on majority exposure to variability. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
n | ASU 2014-09,Revenue from contracts with customers (Topic 606) |
n | ASU 2014-15,Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern; |
n | ASU 2015-14,Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date; |
n | ASU 2016-01,Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities; |
n | ASU 2016-02,Leases (Topic 842); |
n | ASU 2016-05,Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships; |
n | ASU 2016-06,Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments; |
n | ASU 2016-07,Investments — Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting; |
n | ASU 2016-08,Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net); |
n | ASU 2016-09,Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting; |
n | ASU 2016-10,Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing; |
n | ASU 2016-11,Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC guidance because of ASU 2014-09 and ASU 2014-16 pursuant to staff announcements at the March 3, 2016 EITF meeting; |
n | ASU 2016-12,Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients; |
n | ASU 2016-13,Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments; and |
n | ASU 2016-15,Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. |
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). |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
n | Supersede current guidance to classify equity securities into different categories (i.e., trading or available-for-sale); |
n | Require equity investments to be measured at fair value with changes in fair value recognized in net income, rather than other comprehensive income. This excludes those investments accounted for under the equity method, or those that result in consolidation of the investee; |
n | Simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment (similar to goodwill); |
n | Eliminate the requirement to disclose the method(s) and significant assumptions used to estimate fair value that is required to be disclosed for financial instruments measured at amortized cost; |
n | Require the use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes; |
n | Require an entity to present separately in other comprehensive income the portion of the change in fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with fair value option for financial instruments; |
n | Require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities, or loans and receivables) on the balance sheet or accompanying notes to the financial statements; |
n | Clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
basis or a modified retrospective basis, is effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. CIT is currently reviewing the impact of adopting this guidance on CIT’s financial statement or disclosures.
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. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
are performance obligations if they are immaterial in the context of the contract. In addition, an entity is permitted to account for shipping and handling activities that occur after the customer has obtained control of a good as an activity to fulfill the promise to transfer the good rather than as an additional promised service. The ASU also improves the guidance on assessing whether promises to transfer goods or services are separately identifiable. For licensing implementation, the ASU clarifies the timing of revenue recognition from a license to intellectual property. In addition, a sales-based or usage-based royalty is promised in exchange for a license and, therefore, the royalty’s recognition constraint applies whenever a license is the sole or predominant item to which the royalty relates.
n | Collectability — ASU 2016-12 clarifies the objective of the entity’s collectability assessment and contains new guidance on when an entity would recognize as revenue consideration it receives if the entity concludes that collectability is not probable; |
n | Presentation of sales tax and other similar taxes collected from customers — Entities are permitted to present revenue net of sales taxes collected on behalf of governmental authorities (i.e., to exclude from the transaction price sales taxes that meet certain criteria); |
n | Noncash consideration — An entity’s calculation of the transaction price for contracts containing noncash consideration would include the fair value of the noncash consideration to be received as of the contract inception date. Further, subsequent changes in the fair value of noncash consideration after contract inception would be subject to the variable consideration constraint only if the fair value varies for reasons other than its form; |
n | Contract modifications and completed contracts at transition — The ASU establishes a practical expedient for contract modifications at transition and defines completed contracts as those for which all (or substantially all) revenue was recognized under the applicable revenue guidance before the new revenue standard was initially applied; |
n | Transition technical correction — Entities that elect to use the full retrospective transition method to adopt the new revenue standard would no longer be required to disclose the effect of the change in accounting principle on the period of adoption; however, entities would still be required to disclose the effects on pre-adoption periods that were retrospectively adjusted. |
n | Requiring companies to record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement; a Company would account for excess tax benefits and deficiencies as discrete items in the period in which they occur (i.e., they would be excluded from the estimated annual effective tax rate). |
n | Eliminating the requirement that excess tax benefits be realized (i.e., reduce income taxes payable) before being recognized, and to require excess tax benefits to be presented as an operating activity in the statement of cash flows. |
n | Using employee’s shares to satisfy the employers’ statutory income tax withholding obligation. The threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates in the applicable jurisdictions. Cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity. |
n | Allowing an entity to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
n | Use of an ALLL approach (versus permanently writing down the security’s cost basis) for impairment; |
n | Limit the ALLL to the amount at which the security’s fair value is less than its amortized cost basis; |
n | Removing the consideration for the length of time fair value has been less than amortized cost when assessing credit loss; |
n | Removing the consideration for recoveries in fair value after the balance sheet date when assessing whether a credit loss exists. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
n | Issue 1 — Debt prepayment or debt extinguishment costs — Cash payments for debt prepayment or debt extinguishment costs should be classified as cash outflows for financing activities. |
n | Issue 2 — Settlement of zero-coupon debt instruments — Cash payments for the settlement of zero-coupon debt instruments, including other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, should be classified as cash outflows for operating activities for the portion attributable to interest and as cash outflows for financing activities for the portion attributable to principal. |
n | Issue 3 — Contingent consideration payments made after a business combination — Cash payments made soon after an acquisition’s consummation date (i.e., approximately three months or less) should be classified as cash outflows for investing activities. Payments made thereafter should be classified as cash outflows for financing activities up to the amount of the original contingent consideration liability. Payments made in excess of the amount of the original contingent consideration liability should be classified as cash outflows for operating activities. |
n | Issue 4 — Proceeds from the settlement of insurance claim — Cash payments received from the settlement of insurance claims should be classified on the basis of the nature of the loss (or each component loss, if an entity receives a lump-sum settlement). |
n | Issue 5 — Proceeds from the settlement of corporate-owned life insurance (“COLI”) policies, including bank-owned life insurance (“BOLI”) policies — Cash payments received from the settlement of COLI or BOLI policies should be classified as cash inflows from investing activities. Cash payments for premiums on COLI or BOLI policies may be classified as cash outflows for investing, operating, or a combination of investing and operating activities. |
n | Issue 6 — Distributions received from equity method investments — The guidance provides an accounting policy election for classifying distributions received from equity method investments. Such amounts can be classified using a 1) cumulative earnings approach, or 2) nature of distribution (or “look-through”) approach. |
n | Issue 7 — Beneficial interests in securitization transactions — A transferor’s beneficial interest obtained in a securitization of financial assets should be disclosed as a noncash activity. Cash receipts from a transferor’s beneficial interests in securitized trade receivables should be classified as cash inflows from investing activities. |
n | Issue 8 — Separately identifiable cash flows and application of the predominance principle — Entities should use reasonable judgment to separate cash flows. In the absence of specific guidance, an entity should classify each separately identifiable cash source and use on the basis of the nature of the underlying cash flows. For cash flows with aspects of more than one class that cannot be separated, the classification should be based on the activity that is likely to be the predominant source or use of cash flow. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Condensed Balance Sheet of Discontinued Operation (dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Net Finance Receivables(1) | $ | 393.0 | $ | 449.5 | ||||||
Other assets(2) | 59.9 | 51.0 | ||||||||
Assets of discontinued operations | $ | 452.9 | $ | 500.5 | ||||||
Secured borrowings(1) | $ | 386.6 | $ | 440.6 | ||||||
Other liabilities(3) | 541.2 | 255.6 | ||||||||
Liabilities of discontinued operations | $ | 927.8 | $ | 696.2 |
(1) | Net finance receivables include $385.6 million and $440.2 million of securitized balances at September 30, 2016 and December 31, 2015, respectively, and $7.4 million and $9.3 million of additional draws awaiting securitization respectively. Secured borrowings relate to those receivables. |
(2) | Amount includes servicing advances, servicer receivables and property and equipment, net of accumulated depreciation. |
(3) | Other liabilities include contingent liabilities, reverse mortgage servicing liabilities and other accrued liabilities. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Condensed Statements of Operations(dollars in millions)
Quarters Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Interest income(1) | $ | 2.8 | $ | 2.2 | $ | 8.7 | $ | 2.2 | ||||||||||
Interest expense(1) | (2.5 | ) | (2.3 | ) | (8.1 | ) | (2.3 | ) | ||||||||||
Other income (loss)(2) | (10.3 | ) | 6.1 | 7.3 | 6.1 | |||||||||||||
Operating expenses(3) | (14.9 | ) | (11.8 | ) | (276.6 | ) | (11.8 | ) | ||||||||||
Loss from discontinued operation before benefit for income taxes | (24.9 | ) | (5.8 | ) | (268.7 | ) | (5.8 | ) | ||||||||||
Benefit for income taxes(4) | 9.3 | 2.1 | 81.3 | 2.1 | ||||||||||||||
Loss from discontinued operation, net of taxes | $ | (15.6 | ) | $ | (3.7 | ) | $ | (187.4 | ) | $ | (3.7 | ) |
(1) | Includes amortization for the premium associated with the HECM loans and related secured borrowings. |
(2) | For the quarter ended September 30, 2016, other income (loss) includes a $19 million impairment charge to the servicing liability related to our reverse mortgage servicing operations. |
(3) | For the quarter and nine months ended September 30, 2016, operating expense is comprised of $5.1 million and $11 million, respectively, in salaries and benefits, $6.6 million and $16.1 million, respectively, in professional and legal services, and $3.2 million and $10.5 million, respectively, for other expenses such as data processing, premises and equipment, and miscellaneous charges. In addition, operating expenses for the nine months ended September 30, 2016 included a one-time increase to the servicing-related reserve of approximately $230 million due to a change in estimate, which is net of a corresponding increase in the indemnification receivable from the FDIC. For the quarter and nine months ended September 30, 2015, operating expense is comprised of $4.4 million in salaries and benefits, $2.8 million in professional services and $4.6 million for other expenses such as data processing, premises and equipment, legal settlement, and miscellaneous charges. |
(4) | For the quarter and nine months ended September 30, 2016, the Company’s tax rate for discontinued operations is 38% and 30%, respectively. For the quarter and nine months ended September 30, 2015, the Company’s tax rate for discontinued operations is 36.5%. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Condensed Statement of Cash Flows(dollars in millions)
Nine Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | September 30, 2015 | |||||||||
Net cash flows used for operations | $ | (32.0 | ) | $ | (1.4 | ) | ||||
Net cash flows provided by investing activities | 69.8 | 9.8 |
Finance Receivables by Product(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Commercial loans | $ | 20,341.8 | $ | 21,380.9 | ||||||
Direct financing leases and leveraged leases | 2,833.7 | 3,427.5 | ||||||||
Total commercial | 23,175.5 | 24,808.4 | ||||||||
Consumer loans | 6,742.7 | 6,863.3 | ||||||||
Total finance receivables | 29,918.2 | 31,671.7 | ||||||||
Finance receivables held for sale(1) | 2,361.7 | 1,985.1 | ||||||||
Finance receivables and held for sale receivables(1) | $ | 32,279.9 | $ | 33,656.8 |
(1) | Assets held for sale on the Balance Sheet at September 30, 2016 includes finance receivables and operating lease equipment primarily related to portfolios in Canada, China, Business Air and Commercial Air. 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. |
Finance Receivables(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Domestic | Foreign | Total | Domestic | Foreign | Total | |||||||||||||||||||||
Transportation Finance | $ | 317.3 | $ | 1,906.9 | $ | 2,224.2 | $ | 815.1 | $ | 2,727.0 | $ | 3,542.1 | ||||||||||||||
Commercial Banking | 20,265.6 | 299.1 | 20,564.7 | 20,607.9 | 321.3 | 20,929.2 | ||||||||||||||||||||
Consumer and Community Banking(1) | 7,129.3 | – | 7,129.3 | 7,200.4 | – | 7,200.4 | ||||||||||||||||||||
Total | $ | 27,712.2 | $ | 2,206.0 | $ | 29,918.2 | $ | 28,623.4 | $ | 3,048.3 | $ | 31,671.7 |
(1) | The Consumer and Community Banking segment includes certain commercial loans, primarily consisting of a portfolio of Small Business Administration (SBA) loans. These loans are excluded from the Consumer loan balance and included in the Commercial loan balances in the tables throughout this note. |
Components of Net Investment in Finance Receivables(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Unearned income | $ | (715.7 | ) | $ | (870.4 | ) | ||||
Unamortized premiums / (discounts) | (39.1 | ) | (34.0 | ) | ||||||
Accretable yield on Purchased Credit-Impaired (“PCI”) loans | 1,256.8 | 1,294.0 | ||||||||
Net unamortized deferred costs and (fees)(1) | 49.0 | 42.9 |
(1) | Balance relates to Commercial Banking and Transportation Finance segments. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
n | Pass — finance receivables in this category do not meet the criteria for classification in one of the categories below. |
n | 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. |
n | 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. |
Commercial Finance and Held for Sale Receivables — Risk Rating by Class / Segment(dollars in millions)
Grade: | Pass | Special Mention | Classified- accruing | Classified- non-accrual | PCI Loans | Total | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | ||||||||||||||||||||||||||
Transportation Finance | ||||||||||||||||||||||||||
Aerospace | $ | 1,301.6 | $ | 231.5 | $ | 53.0 | $ | 5.0 | $ | – | $ | 1,591.1 | ||||||||||||||
Rail | 103.6 | 1.4 | 1.3 | – | – | 106.3 | ||||||||||||||||||||
Maritime Finance | 845.6 | 170.3 | 496.1 | 49.4 | – | 1,561.4 | ||||||||||||||||||||
Total Transportation | 2,250.8 | 403.2 | 550.4 | 54.4 | – | 3,258.8 | ||||||||||||||||||||
Commercial Banking | ||||||||||||||||||||||||||
Commercial Finance | 7,049.5 | 751.9 | 602.4 | 131.1 | 45.1 | 8,580.0 | ||||||||||||||||||||
Real Estate Finance | 5,060.5 | 178.0 | 92.5 | 6.9 | 76.0 | 5,413.9 | ||||||||||||||||||||
Business Capital | 6,055.2 | 533.0 | 272.4 | 41.9 | – | 6,902.5 | ||||||||||||||||||||
Total Commercial Banking | 18,165.2 | 1,462.9 | 967.3 | 179.9 | 121.1 | 20,896.4 | ||||||||||||||||||||
Consumer & Community Banking | ||||||||||||||||||||||||||
Other Consumer Banking(1) | 348.5 | 13.5 | 20.2 | 0.1 | 4.3 | 386.6 | ||||||||||||||||||||
Non- Strategic Portfolios | 814.4 | 52.5 | 46.8 | 40.0 | – | 953.7 | ||||||||||||||||||||
Total | $ | 21,578.9 | $ | 1,932.1 | $ | 1,584.7 | $ | 274.4 | $ | 125.4 | $ | 25,495.5 | ||||||||||||||
December 31, 2015 | ||||||||||||||||||||||||||
Transportation Finance | ||||||||||||||||||||||||||
Aerospace | $ | 1,635.7 | $ | 65.0 | $ | 46.2 | $ | 15.4 | $ | – | $ | 1,762.3 | ||||||||||||||
Rail | 118.9 | 1.4 | 0.6 | – | – | 120.9 | ||||||||||||||||||||
Maritime Finance | 1,309.0 | 162.0 | 207.4 | – | – | 1,678.4 | ||||||||||||||||||||
Total Transportation Finance | 3,063.6 | 228.4 | 254.2 | 15.4 | – | 3,561.6 | ||||||||||||||||||||
Commercial Banking | ||||||||||||||||||||||||||
Commercial Finance | 8,215.0 | 626.4 | 389.9 | 131.5 | 69.4 | 9,432.2 | ||||||||||||||||||||
Real Estate Finance | 5,143.2 | 97.6 | 18.6 | 3.6 | 94.6 | 5,357.6 | ||||||||||||||||||||
Business Capital | 5,649.0 | 517.0 | 320.1 | 56.0 | – | 6,542.1 | ||||||||||||||||||||
Total Commercial Banking | 19,007.2 | 1,241.0 | 728.6 | 191.1 | 164.0 | 21,331.9 | ||||||||||||||||||||
Consumer & Community Banking | ||||||||||||||||||||||||||
Other Consumer Banking(1) | 300.6 | 12.1 | 18.3 | – | 5.3 | 336.3 | ||||||||||||||||||||
Non- Strategic Portfolios | 1,286.3 | 115.4 | 60.1 | 56.0 | – | 1,517.8 | ||||||||||||||||||||
Total | $ | 23,657.7 | $ | 1,596.9 | $ | 1,061.2 | $ | 262.5 | $ | 169.3 | $ | 26,747.6 |
(1) | The Consumer and Community Banking segment includes certain commercial loans, primarily consisting of a portfolio of Small Business Administration (SBA) loans. These loans are excluded from the Consumer loan balance and included in the Commercial loan balances. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Consumer Loan LTV Distribution(dollars in millions)
Single Family Residential | Reverse Mortgage | ||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Covered Loans | Non-covered Loans | Total Single Family | Covered Loans | Non-covered Loans | Total Reverse | Total Consumer | |||||||||||||||||||||||||||||||||||||
LTV Range | Non-PCI | PCI | Non-PCI | PCI | Residential | Non-PCI | Non-PCI | PCI | Mortgages | Loans | |||||||||||||||||||||||||||||||||
September 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||
Greater than 125% | $ | 1.6 | $ | 296.0 | $ | 13.7 | $ | – | $ | 311.3 | $ | 0.6 | $ | 7.6 | $ | 33.0 | $ | 41.2 | $ | 352.5 | |||||||||||||||||||||||
101% – 125% | 3.2 | 489.8 | 14.3 | – | 507.3 | 1.1 | 11.7 | 10.2 | 23.0 | 530.3 | |||||||||||||||||||||||||||||||||
80% – 100% | 281.7 | 577.7 | 34.3 | – | 893.7 | 26.5 | 40.8 | 8.2 | 75.5 | 969.2 | |||||||||||||||||||||||||||||||||
Less than 80% | 1,559.0 | 871.2 | 1,720.0 | 9.1 | 4,159.3 | 415.4 | 304.2 | 9.6 | 729.2 | 4,888.5 | |||||||||||||||||||||||||||||||||
Not Applicable(1) | – | – | 2.2 | 2.2 | – | – | – | – | 2.2 | ||||||||||||||||||||||||||||||||||
Total | $ | 1,845.5 | $ | 2,234.7 | $ | 1,784.5 | $ | 9.1 | $ | 5,873.8 | $ | 443.6 | $ | 364.3 | $ | 61.0 | $ | 868.9 | $ | 6,742.7 | |||||||||||||||||||||||
December 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||
Greater than 125% | $ | 1.1 | $ | 395.6 | $ | 0.8 | $ | 15.7 | $ | 413.2 | $ | 1.0 | $ | 3.9 | $ | 39.3 | $ | 44.2 | $ | 457.4 | |||||||||||||||||||||||
101% – 125% | 3.6 | 619.9 | 0.2 | 14.9 | 638.6 | 2.5 | 6.5 | 17.0 | 26.0 | 664.6 | |||||||||||||||||||||||||||||||||
80% – 100% | 449.3 | 552.1 | 14.3 | 11.4 | 1,027.1 | 26.5 | 37.4 | 7.0 | 70.9 | 1,098.0 | |||||||||||||||||||||||||||||||||
Less than 80% | 1,621.0 | 829.3 | 1,416.1 | 12.9 | 3,879.3 | 432.6 | 312.5 | 11.1 | 756.2 | 4,635.5 | |||||||||||||||||||||||||||||||||
Not Applicable(1) | – | – | 7.8 | – | 7.8 | – | – | – | – | 7.8 | |||||||||||||||||||||||||||||||||
Total | $ | 2,075.0 | $ | 2,396.9 | $ | 1,439.2 | $ | 54.9 | $ | 5,966.0 | $ | 462.6 | $ | 360.3 | $ | 74.4 | $ | 897.3 | $ | 6,863.3 |
(1) | Certain Consumer Loans do not have LTV’s, including the Credit Card portfolio. |
Covered Loans(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Consumer and Community Banking loans HFI at carrying value | ||||||||||
PCI | $ | 2,234.7 | $ | 2,396.9 | ||||||
Non-PCI | 2,289.1 | 2,537.6 | ||||||||
Total | $ | 4,523.8 | $ | 4,934.5 |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Past Due Finance and Held for Sale Receivables(dollars in millions)
Past Due | |||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
30–59 Days Past Due | 60–89 Days Past Due | 90 Days or Greater | Total Past Due | Current(1) | PCI Loans(2) | Total Finances Receivables | |||||||||||||||||||||||||
September 30, 2016 | |||||||||||||||||||||||||||||||
Transportation Finance | |||||||||||||||||||||||||||||||
Aerospace | $ | – | $ | 0.3 | $ | 0.2 | $ | 0.5 | $ | 1,590.6 | $ | – | $ | 1,591.1 | |||||||||||||||||
Rail | 1.4 | 0.7 | 1.9 | 4.0 | 102.3 | – | 106.3 | ||||||||||||||||||||||||
Maritime Finance | – | – | – | – | 1,561.4 | – | 1,561.4 | ||||||||||||||||||||||||
Total Transportation Finance | 1.4 | 1.0 | 2.1 | 4.5 | 3,254.3 | – | 3,258.8 | ||||||||||||||||||||||||
Commercial Banking | |||||||||||||||||||||||||||||||
Commercial Finance | – | 34.9 | 32.1 | 67.0 | 8,467.9 | 45.1 | 8,580.0 | ||||||||||||||||||||||||
Real Estate Finance | – | 0.1 | – | 0.1 | 5,337.8 | 76.0 | 5,413.9 | ||||||||||||||||||||||||
Business Capital | 93.5 | 24.4 | 13.0 | 130.9 | 6,771.6 | – | 6,902.5 | ||||||||||||||||||||||||
Total Commercial Banking | 93.5 | 59.4 | 45.1 | 198.0 | 20,577.3 | 121.1 | 20,896.4 | ||||||||||||||||||||||||
Consumer & Community Banking | |||||||||||||||||||||||||||||||
Legacy Consumer Mortgages | 24.4 | 7.2 | 33.5 | 65.1 | 2,670.9 | 2,304.8 | 5,040.8 | ||||||||||||||||||||||||
Other Consumer Banking | 6.7 | – | 1.0 | 7.7 | 2,118.2 | 4.3 | 2,130.2 | ||||||||||||||||||||||||
Total Consumer & Community Banking | 31.1 | 7.2 | 34.5 | 72.8 | 4,789.1 | 2,309.1 | 7,171.0 | ||||||||||||||||||||||||
Non-Strategic Portfolios | 6.9 | 3.5 | 15.0 | 25.4 | 928.3 | – | 953.7 | ||||||||||||||||||||||||
Total | $ | 132.9 | $ | 71.1 | $ | 96.7 | $ | 300.7 | $ | 29,549.0 | $ | 2,430.2 | $ | 32,279.9 | |||||||||||||||||
December 31, 2015 | |||||||||||||||||||||||||||||||
Transportation Finance | |||||||||||||||||||||||||||||||
Aerospace | $ | 1.4 | $ | – | $ | 15.4 | $ | 16.8 | $ | 1,745.5 | $ | – | $ | 1,762.3 | |||||||||||||||||
Rail | 8.5 | 2.0 | 2.1 | 12.6 | 108.3 | – | 120.9 | ||||||||||||||||||||||||
Maritime Finance | – | – | – | – | 1,678.4 | – | 1,678.4 | ||||||||||||||||||||||||
Total Transportation Finance | 9.9 | 2.0 | 17.5 | 29.4 | 3,532.2 | – | 3,561.6 | ||||||||||||||||||||||||
Commercial Banking | |||||||||||||||||||||||||||||||
Commercial Finance | – | – | 20.5 | 20.5 | 9,342.3 | 69.4 | 9,432.2 | ||||||||||||||||||||||||
Real Estate Finance | 1.9 | – | 0.7 | 2.6 | 5,260.4 | 94.6 | 5,357.6 | ||||||||||||||||||||||||
Business Capital | 131.1 | 32.8 | 26.8 | 190.7 | 6,351.4 | – | 6,542.1 | ||||||||||||||||||||||||
Total Commercial Banking | 133.0 | 32.8 | 48.0 | 213.8 | 20,954.1 | 164.0 | 21,331.9 | ||||||||||||||||||||||||
Consumer & Community Banking | |||||||||||||||||||||||||||||||
Legacy Consumer Mortgages | 15.8 | 1.7 | 4.1 | 21.6 | 2,923.8 | 2,526.2 | 5,471.6 | ||||||||||||||||||||||||
Other Consumer Banking | 2.7 | 0.3 | 0.4 | 3.4 | 1,765.2 | 5.3 | 1,773.9 | ||||||||||||||||||||||||
Total Consumer & Community Banking | 18.5 | 2.0 | 4.5 | 25.0 | 4,689.0 | 2,531.5 | 7,245.5 | ||||||||||||||||||||||||
Non-Strategic Portfolios | 18.7 | 22.1 | 33.7 | 74.5 | 1,443.3 | – | 1,517.8 | ||||||||||||||||||||||||
Total | $ | 180.1 | $ | 58.9 | $ | 103.7 | $ | 342.7 | $ | 30,618.6 | $ | 2,695.5 | $ | 33,656.8 |
(1) | Due to their nature, reverse mortgage loans are included in Current, as they do not have contractual payments due at a specified time. |
(2) | PCI loans are written down at acquisition to their fair value using an estimate of cash flows deemed to be collectible. Accordingly, such loans are no longer classified as past due or non-accrual even though they may be contractually past due as we expect to fully collect the new carrying values of these loans. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Finance Receivables on Non-Accrual Status(dollars in millions)
September 30, 2016 | December 31, 2015 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Held for Investment | Held for Sale | Total | Held for Investment | Held for Sale | Total | ||||||||||||||||||||||
Transportation Finance | |||||||||||||||||||||||||||
Aerospace | $ | – | $ | 5.0 | $ | 5.0 | $ | 15.4 | $ | – | $ | 15.4 | |||||||||||||||
Maritime Finance | 49.4 | – | 49.4 | – | – | – | |||||||||||||||||||||
Total Transportation Finance | 49.4 | 5.0 | 54.4 | 15.4 | – | 15.4 | |||||||||||||||||||||
Commercial Banking | |||||||||||||||||||||||||||
Commercial Finance | 117.9 | 13.2 | 131.1 | 120.5 | 11.0 | 131.5 | |||||||||||||||||||||
Real Estate Finance | 6.9 | – | 6.9 | 3.6 | – | 3.6 | |||||||||||||||||||||
Business Capital | 41.9 | – | 41.9 | 56.0 | – | 56.0 | |||||||||||||||||||||
Total Commercial Banking | 166.7 | 13.2 | 179.9 | 180.1 | 11.0 | 191.1 | |||||||||||||||||||||
Consumer & Community Banking | |||||||||||||||||||||||||||
Legacy Consumer Mortgages | 13.9 | – | 13.9 | 4.2 | 0.6 | 4.8 | |||||||||||||||||||||
Other Consumer Banking | 0.3 | – | 0.3 | – | 0.4 | 0.4 | |||||||||||||||||||||
Total Consumer & Community Banking | 14.2 | – | 14.2 | 4.2 | 1.0 | 5.2 | |||||||||||||||||||||
Non-Strategic Portfolios | – | 40.0 | 40.0 | – | 56.0 | 56.0 | |||||||||||||||||||||
Total | $ | 230.3 | $ | 58.2 | $ | 288.5 | $ | 199.7 | $ | 68.0 | $ | 267.7 | |||||||||||||||
OREO and repossessed assets | 88.7 | 127.3 | |||||||||||||||||||||||||
Total non-performing assets | $ | 377.2 | $ | 395.0 | |||||||||||||||||||||||
Commercial loans past due 90 days or more accruing | $ | 5.2 | $ | 15.6 | |||||||||||||||||||||||
Consumer loans past due 90 days or more accruing | 24.4 | 0.2 | |||||||||||||||||||||||||
Total Accruing loans past due 90 days or more | $ | 29.6 | $ | 15.8 |
Loans in Process of Foreclosure(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
PCI | $ | 221.6 | $ | 320.0 | ||||||
Non-PCI | 109.6 | 71.0 | ||||||||
Loans in process of foreclosure | $ | 331.2 | $ | 391.0 | ||||||
OREO | $ | 83.5 | $ | 118.0 |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Impaired Loans(dollars in millions)
Average Recorded Investment | |||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||
Recorded Investment | Unpaid Principal Balance | Related Allowance | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||||
September 30, 2016 | |||||||||||||||||||||||||||||||
With no related allowance recorded: | |||||||||||||||||||||||||||||||
Transportation Finance | |||||||||||||||||||||||||||||||
Aerospace | $ | – | $ | – | $ | – | $ | – | $ | – | $ | 0.2 | $ | – | |||||||||||||||||
Commercial Banking | |||||||||||||||||||||||||||||||
Commercial Finance | 17.5 | 34.0 | – | 13.6 | 7.7 | 13.2 | 4.3 | ||||||||||||||||||||||||
Business Capital | 2.0 | 6.1 | – | 5.5 | 5.6 | 6.2 | 5.8 | ||||||||||||||||||||||||
Real Estate Finance | 0.8 | 0.8 | – | 0.8 | 1.7 | 1.5 | 0.8 | ||||||||||||||||||||||||
Non-Strategic Portfolios | – | – | – | – | 6.1 | – | 9.2 | ||||||||||||||||||||||||
With an allowance recorded: | |||||||||||||||||||||||||||||||
Transportation Finance | |||||||||||||||||||||||||||||||
Aerospace | – | – | – | – | 4.7 | 3.8 | 2.4 | ||||||||||||||||||||||||
Maritime Finance | 49.4 | 49.4 | 6.8 | 24.7 | – | 12.3 | – | ||||||||||||||||||||||||
Commercial Banking | |||||||||||||||||||||||||||||||
Commercial Finance | 100.4 | 107.7 | 23.8 | 113.6 | 45.5 | 117.1 | 40.8 | ||||||||||||||||||||||||
Business Capital | 4.0 | 4.0 | 2.8 | 5.9 | 8.6 | 8.6 | 4.3 | ||||||||||||||||||||||||
Real Estate Finance | 3.1 | 3.1 | 0.4 | 3.1 | – | 2.4 | – | ||||||||||||||||||||||||
Non-Strategic Portfolios | – | – | – | – | 11.1 | – | 9.1 | ||||||||||||||||||||||||
Total Impaired Loans(1) | 177.2 | 205.1 | 33.8 | 167.2 | 91.0 | 165.3 | 76.7 | ||||||||||||||||||||||||
Total Loans Impaired at Acquisition Date and Convenience Date(2) | 2,430.2 | 3,556.9 | 13.8 | 2,459.3 | 1,421.6 | 2,543.8 | 711.1 | ||||||||||||||||||||||||
Total | $ | 2,607.4 | $ | 3,762.0 | $ | 47.6 | $ | 2,626.5 | $ | 1,512.6 | $ | 2,709.1 | $ | 787.8 |
Recorded Investment | Unpaid Principal Balance | Related Allowance | Average Recorded Investment(3) | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2015 | ||||||||||||||||||
With no related allowance recorded: | ||||||||||||||||||
Commercial Banking | ||||||||||||||||||
Commercial Finance | $ | 15.4 | $ | 22.8 | $ | – | $ | 6.5 | ||||||||||
Business Capital | 6.3 | 9.7 | – | 5.9 | ||||||||||||||
Real Estate Finance | 0.2 | 0.8 | – | 0.7 | ||||||||||||||
Non-Strategic Portfolios | – | – | – | 7.3 | ||||||||||||||
With an allowance recorded: | ||||||||||||||||||
Transportation Finance | ||||||||||||||||||
Aerospace | 15.4 | 15.4 | 0.4 | 5.0 | ||||||||||||||
Commercial Banking | ||||||||||||||||||
Commercial Finance | 102.6 | 112.1 | 22.7 | 53.2 | ||||||||||||||
Business Capital | 9.7 | 11.7 | 4.7 | 5.4 | ||||||||||||||
Non-Strategic Portfolios | – | – | – | 7.3 | ||||||||||||||
Total Impaired Loans(1) | 149.6 | 172.5 | 27.8 | 91.3 | ||||||||||||||
Total Loans Impaired at Acquisition Date and Convenience Date(2) | 2,695.5 | 3,977.3 | 4.9 | 1,108.0 | ||||||||||||||
Total | $ | 2,845.1 | $ | 4,149.8 | $ | 32.7 | $ | 1,199.3 |
(1) | Interest income recorded for the three and nine months ended September 30, 2016 and the year ended December 31, 2015 while the loans were impaired were $0.5 million, $1.4 million and $1.5 million of which $0.2 million, $0.6 million and $0.5 million was interest recognized using cash-basis method of accounting, respectively. Interest income recorded for the three and nine months ended September 30, 2015 while the loans were impaired were $0.2 million and $0.8 million of which $0.1 million was interest recognized using cash-basis method of accounting. |
(2) | Details of finance receivables that were identified as impaired at the Acquisition Date are presented under Loans Acquired with Deteriorated Credit Quality. |
(3) | Average recorded investment for the year ended December 31, 2015. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
n | Instances where the primary source of payment is no longer sufficient to repay the loan in accordance with terms of the related loan document; |
n | Lack of current financial data related to the borrower or guarantor; |
n | Delinquency status of the loan; |
n | Borrowers experiencing problems, such as operating losses, marginal working capital, inadequate cash flow, excessive financial leverage or business interruptions; |
n | Loans secured by collateral that is not readily marketable or that has experienced or is susceptible to deterioration in realizable value; and |
n | Loans to borrowers in industries or countries experiencing severe economic instability. |
n | “Orderly liquidation value” is the basis for collateral valuation; |
n | Appraisals are updated annually or more often as market conditions warrant; and |
n | Appraisal values are discounted in the determination of impairment if the: |
n | appraisal does not reflect current market conditions; or |
n | collateral consists of inventory, accounts receivable, or other forms of collateral that may become difficult to locate, or collect or may be subject to pilferage in a liquidation. |
Purchased Credit Impaired Loans(1)(dollars in millions)
September 30, 2016 | Unpaid Principal Balance | Carrying Value | Allowance for Loan Losses | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Commercial Banking | |||||||||||||||
Commercial Finance | $ | 74.9 | $ | 45.1 | $ | 1.8 | |||||||||
Real Estate Finance | 122.1 | 76.0 | 3.8 | ||||||||||||
Consumer & Community Banking | |||||||||||||||
Other Consumer Banking | 5.6 | 4.3 | – | ||||||||||||
Legacy Consumer Mortgages | 3,354.3 | 2,304.8 | 8.2 | ||||||||||||
$ | 3,556.9 | $ | 2,430.2 | $ | 13.8 |
(1) | PCI loans from prior transactions were not significant and are not included. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Purchased Credit Impaired Loans(1)(dollars in millions) (continued)
December 31, 2015 | Unpaid Principal Balance | Carrying Value | Allowance for Loan Losses | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Commercial Banking | |||||||||||||||
Commercial Finance | $ | 115.5 | $ | 69.4 | $ | 2.5 | |||||||||
Real Estate Finance | 161.1 | 94.6 | 0.6 | ||||||||||||
Consumer & Community Banking | |||||||||||||||
Other Consumer Banking | 6.8 | 5.3 | – | ||||||||||||
Legacy Consumer Mortgages | 3,693.9 | 2,526.2 | 1.8 | ||||||||||||
$ | 3,977.3 | $ | 2,695.5 | $ | 4.9 |
(1) | PCI loans from prior transactions were not significant and are not included. |
September 30, 2016 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(dollars in millions) | Non- criticized | Criticized | Total | |||||||||||
Commercial Finance | $ | 5.2 | $ | 39.9 | $ | 45.1 | ||||||||
Real Estate Finance | 35.9 | 40.1 | 76.0 | |||||||||||
Total | $ | 41.1 | $ | 80.0 | $ | 121.1 |
December 31, 2015 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Non- criticized | Criticized | Total | ||||||||||||
Commercial Finance | $ | 5.3 | $ | 64.1 | $ | 69.4 | ||||||||
Real Estate Finance | 33.2 | 61.4 | 94.6 | |||||||||||
Total | $ | 38.5 | $ | 125.5 | $ | 164.0 |
(dollars in millions) | September 30, 2016 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Quarter Ended | Nine Months Ended | |||||||||
Beginning Balance | $ | 1,274.8 | $ | 1,294.0 | ||||||
Accretion into interest income | (48.4 | ) | (149.3 | ) | ||||||
Reclassification from non-accretable difference | 35.8 | 146.2 | ||||||||
Disposals and Other | (5.4 | ) | (34.1 | ) | ||||||
Balance at September 30, 2016 | $ | 1,256.8 | $ | 1,256.8 |
Quarter and Nine Months Ended September 30, 2015 | ||||||
---|---|---|---|---|---|---|
Balance at August 3, 2015(1) | $ | 1,254.8 | ||||
Accretion into interest income | (32.1 | ) | ||||
Reclassification from non-accretable difference | 0.1 | |||||
Disposals and Other | (5.9 | ) | ||||
Balance at September 30, 2015 | $ | 1,216.9 |
(1) | Balance at August 3, 2015 reflects reclassification of certain PCI loans and measurement period adjustments. Refer to the Company’s December 31, 2015 Form 10-K for further discussion. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
n | Borrower is in default with CIT or other material creditor |
n | Borrower has declared bankruptcy |
n | Growing doubt about the borrower’s ability to continue as a going concern |
n | Borrower has (or is expected to have) insufficient cash flow to service debt |
n | Borrower is de-listing its securities |
n | Borrower’s inability to obtain funds from other sources |
n | Breach of financial covenants by the borrower. |
n | Assets used to satisfy debt are less than CIT’s recorded investment in the receivable |
n | Modification of terms — interest rate changed to below market rate |
n | Maturity date extension at an interest rate less than market rate |
n | The borrower does not otherwise have access to funding for debt with similar risk characteristics in the market at the restructured rate and terms |
n | Capitalization of interest |
n | Increase in interest reserves |
n | Conversion of credit to Payment-In-Kind (PIK) |
n | Delaying principal and/or interest for a period of three months or more |
n | Partial forgiveness of the balance. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
n | The nature of modifications qualifying as TDR’s based upon recorded investment at September 30, 2016 was comprised of payment deferrals for 14% and covenant relief and/or other for 86%. December 31, 2015 TDR recorded investment was comprised of payment deferrals for 13% and covenant relief and/or other for 87%. |
n | 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; |
n | 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 quarters ended September 30, 2016 and 2015 was not significant; |
n | 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 quarters ended September 30, 2016 and 2015 was not significant, as debt forgiveness is a relatively small component of the Company’s modification programs; and |
n | 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. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
prepayments, and estimated future collateral values (determined by applying externally published market index). In addition, drivers of cash flows include:
1) | Mobility rates — We used the actuarial estimates of contract termination using the Society of Actuaries mortality tables, adjusted for expected prepayments and relocations. |
2) | Home Price Appreciation — Consistent with other projections from various market sources, we use the Moody’s baseline forecast at a regional level to estimate home price appreciation on a loan-level basis. |
Future Advances(dollars in millions)
Year Ending: | ||||||
---|---|---|---|---|---|---|
2016 | $ | 3.7 | ||||
2017 | 13.4 | |||||
2018 | 11.2 | |||||
2019 | 9.3 | |||||
2020 | 7.7 | |||||
Years 2021 – 2025 | 21.6 | |||||
Years 2026 – 2030 | 7.0 | |||||
Years 2031 – 2035 | 1.9 | |||||
Thereafter | 0.5 | |||||
Total(1),(2) | $ | 76.3 |
(1) | This table does not take into consideration cash inflows including payments from mortgagors or payoffs based on contractual terms. |
(2) | This table includes the reverse mortgages supported by the Company as a result of the IndyMac loss-share agreements with the FDIC. As of September 30, 2016, the Company is responsible for funding up to a remaining $54 million of the total amount. Refer to Note 5 —Indemnification Asset for more information on this agreement and the Company’s responsibilities toward this reverse mortgage portfolio. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Allowance for Loan Losses and Recorded Investment in Finance Receivables(dollars in millions)
Transportation Finance | Commercial Banking | Consumer & Community Banking | Non-Strategic Portfolios | Corporate and Other | Total | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Quarter Ended September 30, 2016 | |||||||||||||||||||||||||||
Balance — June 30, 2016 | $ | 51.3 | 327.6 | $ | 20.5 | $ | – | $ | – | $ | 399.4 | ||||||||||||||||
Provision for credit losses | 5.5 | 39.2 | 1.6 | (0.1 | ) | – | 46.2 | ||||||||||||||||||||
Other(1) | – | (2.8 | ) | 2.3 | – | – | (0.5 | ) | |||||||||||||||||||
Gross charge-offs(2) | (2.1 | ) | (27.7 | ) | (0.7 | ) | – | – | (30.5 | ) | |||||||||||||||||
Recoveries | – | 6.2 | 0.8 | 0.1 | – | 7.1 | |||||||||||||||||||||
Balance — September 30, 2016 | $ | 54.7 | $ | 342.5 | $ | 24.5 | $ | – | $ | – | $ | 421.7 | |||||||||||||||
Nine Months Ended September 30, 2016 | |||||||||||||||||||||||||||
Balance — December 31, 2015 | $ | 39.4 | $ | 310.5 | $ | 10.3 | $ | – | $ | – | $ | 360.2 | |||||||||||||||
Provision for credit losses | 43.8 | 124.1 | 5.8 | (0.1 | ) | – | 173.6 | ||||||||||||||||||||
Other(1) | (0.2 | ) | (4.1 | ) | 7.9 | – | 3.6 | ||||||||||||||||||||
Gross charge-offs(2) | (28.3 | ) | (101.5 | ) | (1.9 | ) | – | – | (131.7 | ) | |||||||||||||||||
Recoveries | – | 13.5 | 2.4 | 0.1 | – | 16.0 | |||||||||||||||||||||
Balance — September 30, 2016 | $ | 54.7 | $ | 342.5 | $ | 24.5 | $ | – | $ | – | $ | 421.7 | |||||||||||||||
Allowance balance at September 30, 2016 | |||||||||||||||||||||||||||
Loans individually evaluated for impairment | $ | 6.8 | $ | 27.0 | $ | – | $ | – | $ | – | $ | 33.8 | |||||||||||||||
Loans collectively evaluated for impairment | 47.9 | 309.9 | 16.3 | – | – | 374.1 | |||||||||||||||||||||
Loans acquired with deteriorated credit quality(3) | – | 5.6 | 8.2 | – | – | 13.8 | |||||||||||||||||||||
Allowance for loan losses | $ | 54.7 | $ | 342.5 | $ | 24.5 | $ | – | $ | – | $ | 421.7 | |||||||||||||||
Other reserves(1) | $ | 0.4 | $ | 47.1 | $ | 0.2 | $ | – | $ | – | $ | 47.7 | |||||||||||||||
Finance receivables at September 30, 2016 | |||||||||||||||||||||||||||
Loans individually evaluated for impairment | $ | 49.4 | $ | 127.8 | $ | – | $ | – | $ | – | $ | 177.2 | |||||||||||||||
Loans collectively evaluated for impairment | 2,174.8 | 20,315.8 | 4,820.2 | – | – | 27,310.8 | |||||||||||||||||||||
Loans acquired with deteriorated credit quality(3) | – | 121.1 | 2,309.1 | – | – | 2,430.2 | |||||||||||||||||||||
Ending balance | $ | 2,224.2 | $ | 20,564.7 | $ | 7,129.3 | $ | – | $ | – | $ | 29,918.2 | |||||||||||||||
Percent of loans to total loans | 7.4 | % | 68.8 | % | 23.8 | % | 0 | % | 0 | % | 100 | % | |||||||||||||||
Quarter Ended September 30, 2015 | |||||||||||||||||||||||||||
Balance — June 30, 2015 | $ | 33.4 | $ | 277.6 | $ | – | $ | 39.9 | $ | – | $ | 350.9 | |||||||||||||||
Provision for credit losses | (1.6 | ) | 43.2 | 5.1 | 3.2 | – | 49.9 | ||||||||||||||||||||
Other(1) | 0.1 | (3.1 | ) | – | (1.5 | ) | – | (4.5 | ) | ||||||||||||||||||
Gross charge-offs(2) | (0.1 | ) | (22.8 | ) | (1.6 | ) | (42.9 | ) | – | (67.4 | ) | ||||||||||||||||
Recoveries | – | 4.3 | 0.5 | 1.3 | – | 6.1 | |||||||||||||||||||||
Balance — September 30, 2015 | $ | 31.8 | $ | 299.2 | $ | 4.0 | $ | – | $ | – | $ | 335.0 | |||||||||||||||
Nine Months Ended September 30, 2015 | |||||||||||||||||||||||||||
Balance — December 31, 2014 | $ | 26.5 | $ | 282.5 | $ | – | $ | 37.4 | $ | – | $ | 346.4 | |||||||||||||||
Provision for credit losses | 5.9 | 85.6 | 5.1 | 6.3 | – | 102.9 | |||||||||||||||||||||
Other(1) | 0.1 | (5.9 | ) | – | (2.8 | ) | – | (8.6 | ) | ||||||||||||||||||
Gross charge-offs(2) | (0.8 | ) | (75.2 | ) | (1.6 | ) | (50.6 | ) | – | (128.2 | ) | ||||||||||||||||
Recoveries | 0.1 | 12.2 | 0.5 | 9.7 | – | 22.5 | |||||||||||||||||||||
Balance — September 30, 2015 | $ | 31.8 | $ | 299.2 | $ | 4.0 | $ | – | $ | – | $ | 335.0 |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Allowance for Loan Losses and Recorded Investment in Finance Receivables(dollars in millions) (continued)
Transportation Finance | Commercial Banking | Consumer & Community Banking | Non-Strategic Portfolios | Corporate and Other | Total | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Allowance balance at September 30, 2015 | |||||||||||||||||||||||||||
Loans individually evaluated for impairment | $ | 0.9 | $ | 17.4 | $ | – | $ | – | $ | – | $ | 18.3 | |||||||||||||||
Loans collectively evaluated for impairment | 30.9 | 281.8 | 3.6 | – | – | 316.3 | |||||||||||||||||||||
Loans acquired with deteriorated credit quality(3) | – | – | 0.4 | – | – | 0.4 | |||||||||||||||||||||
Allowance for loan losses | $ | 31.8 | $ | 299.2 | $ | 4.0 | $ | – | $ | – | $ | 335.0 | |||||||||||||||
Other reserves(1) | $ | – | $ | 40.6 | $ | – | $ | 0.2 | $ | – | $ | 40.8 | |||||||||||||||
Finance receivables at September 30, 2015 | |||||||||||||||||||||||||||
Loans individually evaluated for impairment | $ | 4.7 | $ | 97.5 | $ | – | $ | – | $ | – | $ | 102.2 | |||||||||||||||
Loans collectively evaluated for impairment | 3,300.8 | 21,553.3 | 4,606.8 | – | – | 29,460.9 | |||||||||||||||||||||
Loans acquired with deteriorated credit quality(3) | – | 198.7 | 2,644.4 | – | – | 2,843.1 | |||||||||||||||||||||
Ending balance | $ | 3,305.5 | $ | 21,849.5 | $ | 7,251.2 | $ | – | $ | – | $ | 32,406.2 | |||||||||||||||
Percentage of loans to total loans | 10.2 | % | 67.4 | % | 22.4 | % | 0 | % | 0 | % | 100 | % |
(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 loans that were charged off and reimbursed by the FDIC under the indemnification provided by the FDIC, sales and foreign currency translations. |
(2) | Gross charge-offs of amounts specifically reserved in prior periods that were charged directly to the Allowance for loan losses included $4 million and $27 million, for the quarter and nine months ended September 30, 2016, respectively, and $12 million and $17 million for the quarter and nine months ended September 30, 2015. The current quarter charge-offs related to Commercial Banking for all periods. The prior year quarter charge-offs related to Commercial Banking. The prior year to date charge-offs related to Commercial Banking, and Non-Strategic Portfolios. |
(3) | Represents loans considered impaired as part of the OneWest transaction and are accounted for under the guidance in ASC 310-30 (Loans and Debt Securities Acquired with Deteriorated Credit Quality). |
Indemnification Assets(dollars in millions)
September 30, 2016 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
IndyMac Transaction | La Jolla Transaction | Total | ||||||||||||
Loan indemnification(1) | $ | 249.0 | $ | – | $ | 249.0 | ||||||||
Reverse mortgage indemnification | 10.7 | – | 10.7 | |||||||||||
Agency claims indemnification(2) | 102.5 | – | 102.5 | |||||||||||
Total | $ | 362.2 | $ | – | $ | 362.2 | ||||||||
Receivable from (Payable to) the FDIC | $ | 5.5 | $ | (1.5 | ) | $ | 4.0 |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Indemnification Assets(dollars in millions) (continued)
December 31, 2015 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
IndyMac Transaction | La Jolla Transaction | Total | ||||||||||||
Loan indemnification(1) | $ | 338.6 | $ | 0.3 | $ | 338.9 | ||||||||
Reverse mortgage indemnification | 10.3 | – | 10.3 | |||||||||||
Agency claims indemnification(2) | 65.6 | – | 65.6 | |||||||||||
Total | $ | 414.5 | $ | 0.3 | $ | 414.8 | ||||||||
Receivable from (Payable to) the FDIC | $ | 18.6 | $ | (1.9 | ) | $ | 16.7 |
(1) | As of September 30, 2016, the carrying value of the IndyMac loan indemnification decreased by $89.6 million from December 31, 2015, which is comprised of $69.1 million in claim submissions filed with the FDIC during the period and $20.5 million in other (yield and provision for credit losses adjustments). |
(2) | As of September 30, 2016, the carrying value of the IndyMac agency claims indemnification increased by $36.9 million from December 31, 2015, which is primarily attributable to an increase in the amount of servicing-related obligations covered by the loss share agreement related to reverse mortgage loans. |
Submission of Qualifying Losses for Reimbursement (dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Unpaid principal balance | $ | 3,969.0 | $ | 4,372.8 | ||||||
Cumulative losses incurred | 3,717.8 | 3,623.4 | ||||||||
Cumulative claims | 3,710.3 | 3,608.4 | ||||||||
Cumulative reimbursement | 884.8 | 802.6 |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Submission of Qualifying Losses for Reimbursement(dollars in millions)
September 30, 2016 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
SFR | Commercial(1) | Total | ||||||||||||
Unpaid principal balance | $ | 1,302.3 | $ | – | $ | 1,302.3 | ||||||||
Cumulative losses incurred | 415.1 | 9.0 | 424.1 | |||||||||||
Cumulative claims | 414.8 | 9.0 | 423.8 | |||||||||||
Cumulative reimbursement | – | – | – |
December 31, 2015 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
SFR | Commercial(1) | Total | ||||||||||||
Unpaid principal balance | $ | 1,456.8 | $ | – | $ | 1,456.8 | ||||||||
Cumulative losses incurred | 408.5 | 9.0 | 417.5 | |||||||||||
Cumulative claims | 407.2 | 9.0 | 416.2 | |||||||||||
Cumulative reimbursement | – | – | – |
(1) | Due to the expiration of the loss share agreement covering commercial loans in December 2014, the outstanding unpaid principal balance eligible for reimbursement is zero. As provided by the loss share agreement, the loss recoveries for commercial loans extend for three years from expiration date (December 2017). As such, the cumulative losses incurred, claim submissions and reimbursements for commercial loans are reduced by the reported recoveries. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Submission of Qualifying Losses for Reimbursement(dollars in millions)
September 30, 2016 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
SFR | Commercial(1) | Total | ||||||||||||
Unpaid principal balance | $ | 73.0 | $ | – | $ | 73.0 | ||||||||
Cumulative losses incurred | 56.3 | 353.6 | 409.9 | |||||||||||
Cumulative claims | 56.3 | 353.6 | 409.9 | |||||||||||
Cumulative reimbursement | 45.0 | 282.9 | 327.9 |
December 31, 2015 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
SFR | Commercial(1) | Total | ||||||||||||
Unpaid principal balance | $ | 89.3 | $ | – | $ | 89.3 | ||||||||
Cumulative losses incurred | 56.2 | 359.5 | 415.7 | |||||||||||
Cumulative claims | 56.2 | 359.5 | 415.7 | |||||||||||
Cumulative reimbursement | 45.0 | 287.6 | 332.6 |
(1) | Due to the expiration of the loss share agreement covering commercial loans in March 2015, the outstanding unpaid principal balance eligible for reimbursement is zero. As provided by the loss share agreement, the loss recoveries for commercial loans extend for three years from expiration date (March 2018). As such, the cumulative losses incurred, claim submissions and reimbursements for commercial loans are reduced by the reported recoveries. |
Investment Securities(dollars in millions)
September 30, 2016 | December 31, 2015 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Available-for-sale securities | |||||||||||
Debt securities | $ | 2,729.2 | $ | 2,007.8 | |||||||
Equity securities | 34.8 | 14.3 | |||||||||
Held-to-maturity securities | |||||||||||
Debt securities(1) | 254.4 | 300.1 | |||||||||
Securities carried at fair value with changes recorded in net income | |||||||||||
Debt securities | 301.3 | 339.7 | |||||||||
Non-marketable investments(2) | 272.7 | 291.9 | |||||||||
Total investment securities | $ | 3,592.4 | $ | 2,953.8 |
(1) | Recorded at amortized cost. |
(2) | Non-marketable investments include securities of the FRB and FHLB carried at cost of $253.7 million at September 30, 2016 and $263.5 million at December 31, 2015. The remaining non-marketable investments include ownership interests greater than 3% in limited partnership investments that are accounted for under the equity method, other investments carried at cost, which 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, totaling $19.0 million and $28.4 million at September 30, 2016 and December 31, 2015, respectively. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Interest and Dividend Income(dollars in millions)
Quarters Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Interest income — investments | $ | 19.8 | $ | 4.5 | $ | 58.8 | $ | 11.9 | ||||||||||
Interest income — interest bearing deposits | 9.5 | 15.0 | 26.7 | 24.2 | ||||||||||||||
Dividends — investments | 3.2 | 4.0 | 9.6 | 5.0 | ||||||||||||||
Total interest and dividends | $ | 32.5 | $ | 23.5 | $ | 95.1 | $ | 41.1 |
Securities AFS — Amortized Cost and Fair Value(dollars in millions)
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | |||||||||||||||||||
Debt securities AFS | |||||||||||||||||||
Mortgage-backed Securities | |||||||||||||||||||
U.S. government agency securities | $ | 838.3 | $ | 5.9 | $ | (0.2 | ) | $ | 844.0 | ||||||||||
Non-agency securities | 495.1 | 15.8 | (0.5 | ) | 510.4 | ||||||||||||||
U.S. government agency obligations | 874.9 | 0.2 | (0.3 | ) | 874.8 | ||||||||||||||
U.S. Treasury Securities | 99.7 | 0.3 | – | 100.0 | |||||||||||||||
Supranational and foreign government securities | 400.0 | – | – | 400.0 | |||||||||||||||
Total debt securities AFS | 2,708.0 | 22.2 | (1.0 | ) | 2,729.2 | ||||||||||||||
Equity securities AFS | 34.7 | 0.3 | (0.2 | ) | 34.8 | ||||||||||||||
Total securities AFS | $ | 2,742.7 | $ | 22.5 | $ | (1.2 | ) | $ | 2,764.0 | ||||||||||
December 31, 2015 | |||||||||||||||||||
Debt securities AFS | |||||||||||||||||||
Mortgage-backed Securities | |||||||||||||||||||
U.S. government agency securities | $ | 148.4 | $ | – | $ | (0.9 | ) | $ | 147.5 | ||||||||||
Non-agency securities | 573.9 | 0.4 | (7.2 | ) | 567.1 | ||||||||||||||
U.S. government agency obligations | 996.8 | – | (3.7 | ) | 993.1 | ||||||||||||||
Supranational and foreign government securities | 300.1 | – | – | 300.1 | |||||||||||||||
Total debt securities AFS | 2,019.2 | 0.4 | (11.8 | ) | 2,007.8 | ||||||||||||||
Equity securities AFS | 14.4 | 0.1 | (0.2 | ) | 14.3 | ||||||||||||||
Total securities AFS | $ | 2,033.6 | $ | 0.5 | $ | (12.0 | ) | $ | 2,022.1 |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Securities AFS — Maturities(dollars in millions)
September 30, 2016 | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Amortized Cost | Fair Value | Weighted Average Yield | |||||||||||||
Mortgage-backed securities — U.S. government agency securities | |||||||||||||||
Due after 10 years | $ | 838.3 | $ | 844.0 | 2.03 | % | |||||||||
Total | 838.3 | 844.0 | 2.03 | % | |||||||||||
Mortgage-backed securities — non-agency securities | |||||||||||||||
After 5 but within 10 years | 23.3 | 24.1 | 4.93 | % | |||||||||||
Due after 10 years | 471.8 | 486.3 | 5.85 | % | |||||||||||
Total | 495.1 | 510.4 | 5.81 | % | |||||||||||
U.S. government agency obligations | |||||||||||||||
After 1 but within 5 years | 874.9 | 874.8 | 1.23 | % | |||||||||||
Total | 874.9 | 874.8 | 1.23 | % | |||||||||||
U.S. Treasury Securities | |||||||||||||||
After 1 but within 5 years | 99.7 | 100.0 | 0.93 | % | |||||||||||
Total | 99.7 | 100.0 | 0.93 | % | |||||||||||
Supranational and foreign government securities | |||||||||||||||
Due within 1 year | 400.0 | 400.0 | 0.31 | % | |||||||||||
Total | 400.0 | 400.0 | 0.31 | % | |||||||||||
Total debt securities available-for-sale | $ | 2,708.0 | $ | 2,729.2 | 2.17 | % |
Securities AFS — Gross Unrealized Loss(dollars in millions)
September 30, 2016 | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Less than 12 months | 12 months or greater | ||||||||||||||||||
Fair Value | Gross Unrealized Loss | Fair Value | Gross Unrealized Loss | ||||||||||||||||
Debt securities AFS | |||||||||||||||||||
Mortgage-backed securities | |||||||||||||||||||
U.S. government agency securities | $ | 33.0 | $ | (0.1 | ) | $ | 11.0 | $ | (0.1 | ) | |||||||||
Non-agency securities | 9.4 | (0.1 | ) | 29.3 | (0.4 | ) | |||||||||||||
U.S. government agency obligations | 174.7 | (0.3 | ) | – | – | ||||||||||||||
Total debt securities AFS | 217.1 | (0.5 | ) | 40.3 | (0.5 | ) | |||||||||||||
Equity securities AFS | 20.3 | (0.2 | ) | – | – | ||||||||||||||
Total securities available-for-sale | $ | 237.4 | $ | (0.7 | ) | $ | 40.3 | $ | (0.5 | ) |
December 31, 2015 | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Less than 12 months | 12 months or greater | ||||||||||||||||||
Fair Value | Gross Unrealized Loss | Fair Value | Gross Unrealized Loss | ||||||||||||||||
Debt securities AFS | |||||||||||||||||||
Mortgage-backed securities | |||||||||||||||||||
U.S. government agency securities | $ | 147.0 | $ | (0.9 | ) | $ | – | $ | – | ||||||||||
Non-agency securities | 495.5 | (7.2 | ) | – | – | ||||||||||||||
U.S. government agency obligations | 943.0 | (3.7 | ) | – | – | ||||||||||||||
Total debt securities AFS | 1,585.5 | (11.8 | ) | – | – | ||||||||||||||
Equity securities AFS | 0.2 | (0.2 | ) | – | – | ||||||||||||||
Total securities available-for-sale | $ | 1,585.7 | $ | (12.0 | ) | $ | – | $ | – |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Changes in Accretable Yield(dollars in millions)
Quarter Ended September 30, 2016 | Nine Months Ended September 30, 2016 | |||||||
---|---|---|---|---|---|---|---|---|
Beginning Balance | $ | 179.2 | $ | 189.0 | ||||
Accretion into interest income | (7.1 | ) | (22.3 | ) | ||||
Reclassifications from non-accretable difference | 0.6 | 6.0 | ||||||
Balance at September 30, 2016 | $ | 172.7 | $ | 172.7 |
Quarter Ended September 30, 2015 | Nine Months Ended September 30, 2015 | |||||||
---|---|---|---|---|---|---|---|---|
Beginning Balance | $ | 298.4 | $ | 298.4 | ||||
Accretion into interest income | (8.2 | ) | (8.2 | ) | ||||
Balance at September 30, 2015 | $ | 290.2 | $ | 290.2 |
Securities Carried at Fair Value with Changes Recorded in Net Income(dollars in millions)
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | |||||||||||||||||||
Mortgage-backed Securities — Non-agency | $ | 295.9 | $ | 6.1 | $ | (0.7 | ) | $ | 301.3 | ||||||||||
Total securities held at fair value with changes recorded in net income | $ | 295.9 | $ | 6.1 | $ | (0.7 | ) | $ | 301.3 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2015 | |||||||||||||||||||
Mortgage-backed Securities — Non-agency | $ | 343.8 | $ | 0.3 | $ | (4.4 | ) | $ | 339.7 | ||||||||||
Total securities held at fair value with changes recorded in net income | $ | 343.8 | $ | 0.3 | $ | (4.4 | ) | $ | 339.7 |
Securities Carried at Fair Value with changes Recorded in Net Income — Amortized Cost and Fair Value Maturities(dollars in millions)
September 30, 2016 | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Amortized Cost | Fair Value | Weighted Average Yield | |||||||||||||
Mortgage-backed securities — non agency securities | |||||||||||||||
After 5 but within 10 years | $ | 0.2 | $ | 0.3 | 37.26 | % | |||||||||
Due after 10 years | 295.7 | 301.0 | 4.89 | % | |||||||||||
Total | $ | 295.9 | $ | 301.3 | 4.92 | % |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Debt Securities HTM — Carrying Value and Fair Value(dollars in millions)
Carrying Value | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | |||||||||||||||||||
Mortgage-backed securities | |||||||||||||||||||
U.S. government agency securities | $ | 120.6 | $ | 1.9 | $ | (0.4 | ) | $ | 122.1 | ||||||||||
State and municipal | 27.7 | 0.1 | (0.8 | ) | 27.0 | ||||||||||||||
Foreign government | 2.4 | 0.1 | – | 2.5 | |||||||||||||||
Corporate — foreign | 103.7 | 6.0 | – | 109.7 | |||||||||||||||
Total debt securities held-to-maturity | $ | 254.4 | $ | 8.1 | $ | (1.2 | ) | $ | 261.3 | ||||||||||
December 31, 2015 | |||||||||||||||||||
Mortgage-backed securities | |||||||||||||||||||
U.S. government agency securities | $ | 147.2 | $ | 1.1 | $ | (2.6 | ) | $ | 145.7 | ||||||||||
State and municipal | 37.1 | – | (1.6 | ) | 35.5 | ||||||||||||||
Foreign government | 13.5 | – | – | 13.5 | |||||||||||||||
Corporate — foreign | 102.3 | 4.5 | – | 106.8 | |||||||||||||||
Total debt securities held-to-maturity | $ | 300.1 | $ | 5.6 | $ | (4.2 | ) | $ | 301.5 |
Debt Securities HTM — Amortized Cost and Fair Value Maturities(dollars in millions)
September 30, 2016 | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Amortized Cost | Fair Value | Weighted Average Yield | |||||||||||||
Mortgage-backed securities — U.S. government agency securities | |||||||||||||||
After 5 but within 10 years | $ | 1.3 | $ | 1.3 | 2.22 | % | |||||||||
Due after 10 years | 119.3 | 120.8 | 2.26 | % | |||||||||||
Total | 120.6 | 122.1 | 2.26 | % | |||||||||||
State and municipal | |||||||||||||||
Due within 1 year | 0.5 | 0.5 | 2.09 | % | |||||||||||
After 1 but within 5 years | 0.5 | 0.5 | 2.46 | % | |||||||||||
After 5 but within 10 years | 0.5 | 0.5 | 2.70 | % | |||||||||||
Due after 10 years | 26.2 | 25.5 | 2.30 | % | |||||||||||
Total | 27.7 | 27.0 | 2.31 | % | |||||||||||
Foreign government | |||||||||||||||
Due within 1 year | 2.4 | 2.5 | 2.43 | % | |||||||||||
Total | 2.4 | 2.5 | 2.43 | % | |||||||||||
Corporate — Foreign securities | |||||||||||||||
After 1 but within 5 years | 103.7 | 109.7 | 4.28 | % | |||||||||||
Total | 103.7 | 109.7 | 4.28 | % | |||||||||||
Total debt securities held-to-maturity | $ | 254.4 | $ | 261.3 | 3.09 | % |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Debt Securities HTM — Gross Unrealized Loss(dollars in millions)
September 30, 2016 | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Less than 12 months | 12 months or greater | ||||||||||||||||||
Fair Value | Gross Unrealized Loss | Fair Value | Gross Unrealized Loss | ||||||||||||||||
Mortgage-backed securities | |||||||||||||||||||
U.S. government agency securities | $ | – | $ | – | $ | 30.1 | $ | (0.4 | ) | ||||||||||
State and municipal | – | – | 22.0 | (0.8 | ) | ||||||||||||||
Total securities held-to-maturity | $ | – | $ | – | $ | 52.1 | $ | (1.2 | ) |
December 31, 2015 | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Less than 12 months | 12 months or greater | ||||||||||||||||||
Fair Value | Gross Unrealized Loss | Fair Value | Gross Unrealized Loss | ||||||||||||||||
Mortgage-backed securities | |||||||||||||||||||
U.S. government agency securities | $ | 62.2 | $ | (0.9 | ) | $ | 40.7 | $ | (1.7 | ) | |||||||||
State and municipal | 3.1 | (0.1 | ) | 28.2 | (1.5 | ) | |||||||||||||
Total securities held-to-maturity | $ | 65.3 | $ | (1.0 | ) | $ | 68.9 | $ | (3.2 | ) |
Deposits(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Deposits Outstanding | $32,854.3 | $32,782.2 | ||||||||
Weighted average contractual interest rate | 1.22% | 1.26% | ||||||||
Weighted average remaining number of days to maturity | 685 days | 864 days |
Nine Months Ended September 30, 2016 | Year Ended December 31, 2015 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Daily average deposits for the period | $32,771.4 | $23,277.8 | ||||||||
Maximum amount outstanding for the period | 33,225.1 | 32,899.6 | ||||||||
Weighted average contractual interest rate for the period | 1.24% | 1.45% |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Deposits — Rates and Maturities(dollars in millions)
September 30, 2016 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Amount | Average Rate | ||||||||||
Deposits — no stated maturity | |||||||||||
Non-interest-bearing checking | $ | 987.1 | – | ||||||||
Interest-bearing checking | 3,074.8 | 0.55 | % | ||||||||
Money market / sweeps(1) | 6,334.9 | 0.82 | % | ||||||||
Savings | 4,325.5 | 0.88 | % | ||||||||
Other | 146.2 | NM | (2) | ||||||||
Total checking and savings deposits | 14,868.5 | ||||||||||
Certificates of deposit, remaining contractual maturity: | |||||||||||
Within one year | 9,135.4 | 1.13 | % | ||||||||
One to two years | 2,689.4 | 1.44 | % | ||||||||
Two to three years | 1,797.8 | 2.20 | % | ||||||||
Three to four years | 2,150.9 | 2.24 | % | ||||||||
Four to five years | 783.7 | 2.41 | % | ||||||||
Over five years | 1,417.9 | 3.15 | % | ||||||||
Total certificates of deposit | 17,975.1 | ||||||||||
Premium / discount | (0.7 | ) | |||||||||
Purchase accounting adjustments | 11.4 | ||||||||||
Total Deposits | $ | 32,854.3 |
(1) | Includes deposit sweep arrangements related to money market and healthcare savings accounts. |
(2) | Not Meaningful — includes certain deposits such as escrow accounts, security deposits and other similar accounts. |
Certificates of Deposit $100 Thousand or More(dollars in millions)
September 30, 2016 | December 31, 2015 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
U.S. certificates of deposit: | |||||||||||
Three months or less | $ | 1,624.0 | $ | 1,476.5 | |||||||
After three months through six months | 1,767.5 | 1,462.6 | |||||||||
After six months through twelve months | 3,482.0 | 2,687.2 | |||||||||
After twelve months | 7,823.0 | 9,245.8 | |||||||||
Total U.S. certificates of deposit $100 thousand or more | $ | 14,696.5 | $ | 14,872.1 |
Borrowings(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
CIT Group Inc. | Subsidiaries | Total | Total(1) | |||||||||||||||
Senior Unsecured | $ | 10,595.1 | $ | – | $ | 10,595.1 | $ | 10,636.3 | ||||||||||
Secured borrowings: | ||||||||||||||||||
Structured financings | – | 3,515.4 | 3,515.4 | 4,687.9 | ||||||||||||||
FHLB advances | – | 2,438.2 | 2,438.2 | 3,117.6 | ||||||||||||||
Total Borrowings | $ | 10,595.1 | $ | 5,953.6 | $ | 16,548.7 | $ | 18,441.8 |
(1) | December 31, 2015 balances for Senior Unsecured and Structured Financing were adjusted to include deferred debt issuance costs of $41.4 million and $55.9 million, respectively, compared to balances presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, upon adoption and in accordance with the provision in ASU 2015-03. Previously these amounts were included in other assets. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Senior Unsecured Notes(dollars in millions)
Maturity Date | Rate % | Date of Issuance | Par Value | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 2017 | 5.000 | % | May 2012 | $ | 1,208.7 | |||||||||
August 2017 | 4.250 | % | August 2012 | 1,725.8 | ||||||||||
March 2018 | 5.250 | % | March 2012 | 1,465.0 | ||||||||||
April 2018 | 6.625 | % | March 2011 | 695.0 | ||||||||||
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 rate and total | 5.02 | % | $ | 10,594.5 |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
FHLB Advances with Pledged Assets Summary(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
FHLB Advances | Pledged Assets | FHLB Advances | Pledged Assets | |||||||||||||||
Total | $ | 2,438.2 | $ | 6,555.5 | $ | 3,117.6 | $ | 6,783.1 |
Structured Financings and Pledged Assets Summary(1)(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Secured Borrowing | Pledged Assets | Secured Borrowing | Pledged Assets | |||||||||||||||
Rail(2) | $ | 840.7 | $ | 1,303.7 | $ | 917.0 | $ | 1,336.1 | ||||||||||
Aerospace(2) | 1,864.7 | 3,516.8 | 2,091.5 | 3,732.2 | ||||||||||||||
Subtotal — Transportation Finance | 2,705.4 | 4,820.5 | 3,008.5 | 5,068.3 | ||||||||||||||
Commercial Finance | – | 0.2 | – | 0.2 | ||||||||||||||
Business Capital | 659.6 | 2,255.1 | 1,128.6 | 2,434.1 | ||||||||||||||
Subtotal — Commercial Banking | 659.6 | 2,255.3 | 1,128.6 | 2,434.3 | ||||||||||||||
Legacy Consumer Mortgages | 0.4 | 0.4 | – | – | ||||||||||||||
Subtotal — Consumer & Community Banking | 0.4 | 0.4 | – | – | ||||||||||||||
Non-Strategic Portfolios | 150.0 | 249.3 | 550.8 | 712.5 | ||||||||||||||
Total | $ | 3,515.4 | $ | 7,325.5 | $ | 4,687.9 | $ | 8,215.1 |
(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, N.A. also pledges assets to secure borrowings from the FHLB and FRB. |
(2) | At September 30, 2016, the TRS related borrowings and pledged assets, respectively, of $1.1 billion and $1.7 billion were included in Transportation Finance. The TRS is described in Note 9 — Derivative Financial Instruments. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Unconsolidated VIEs(dollars in millions)
Unconsolidated VIEs Carrying Value September 30, 2016 | Unconsolidated VIEs Carrying Value December 31, 2015 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Securities | Partnership Investment | Securities | Partnership Investment | |||||||||||||||
Agency securities(1) | $ | 964.6 | $ | – | $ | 294.5 | $ | – | ||||||||||
Non agency securities — Other servicer | 811.6 | – | 906.8 | – | ||||||||||||||
Tax credit equity investments | – | 115.6 | – | 125.0 | ||||||||||||||
Total Assets | $ | 1,776.2 | $ | 115.6 | $ | 1,201.3 | $ | 125.0 | ||||||||||
Commitments to tax credit investments | $ | – | $ | 7.3 | $ | – | $ | 15.7 | ||||||||||
Total Liabilities | $ | – | $ | 7.3 | $ | – | $ | 15.7 | ||||||||||
Maximum loss exposure(2) | $ | 1,776.2 | $ | 115.6 | $ | 1,201.3 | $ | 125.0 |
(1) | In preparing the interim financial statements for the quarter ended September 30, 2016, the Company discovered and corrected an immaterial error impacting the disclosure of agency securities in the amount of $147.0 million as of December 31, 2015. |
(2) | Maximum loss exposure to the unconsolidated VIEs excludes the liability for representations and warranties, corporate guarantees and also excludes servicing advances. |
Fair and Notional Values of Derivative Financial Instruments(1)(dollars in millions)
September 30, 2016 | December 31, 2015 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Notional Amount | Asset Fair Value | Liability Fair Value | Notional Amount | Asset Fair Value | Liability Fair Value | ||||||||||||||||||||||
Qualifying Hedges | |||||||||||||||||||||||||||
Foreign currency forward contracts — net investment hedges | $ | 775.2 | $ | 8.8 | $ | (2.1 | ) | $ | 787.6 | $ | 45.5 | $ | (0.3 | ) | |||||||||||||
Total Qualifying Hedges | 775.2 | 8.8 | (2.1 | ) | 787.6 | 45.5 | (0.3 | ) | |||||||||||||||||||
Non-Qualifying Hedges | |||||||||||||||||||||||||||
Interest rate swaps(2) | 5,064.8 | 104.2 | (98.8 | ) | 4,645.7 | 45.1 | (38.9 | ) | |||||||||||||||||||
Written options | 2,663.0 | 0.2 | (0.2 | ) | 3,346.1 | 0.1 | (2.5 | ) | |||||||||||||||||||
Purchased options | 2,049.1 | 0.2 | (0.2 | ) | 2,342.5 | 2.2 | (0.1 | ) | |||||||||||||||||||
Foreign currency forward contracts | 1,291.1 | 11.0 | (5.7 | ) | 1,624.2 | 47.8 | (6.6 | ) | |||||||||||||||||||
Total Return Swap (TRS) | 1,200.0 | – | (47.8 | ) | 1,152.8 | – | (54.9 | ) | |||||||||||||||||||
Equity Warrants | 1.0 | 0.1 | – | 1.0 | 0.3 | – | |||||||||||||||||||||
Interest Rate Lock Commitments | 41.6 | 0.4 | – | 9.9 | 0.1 | – | |||||||||||||||||||||
Forward Sale Commitments on Agency MBS | 24.0 | – | (0.1 | ) | – | – | – | ||||||||||||||||||||
Credit derivatives | 261.3 | – | (0.5 | ) | 37.6 | – | (0.3 | ) | |||||||||||||||||||
Total Non-qualifying Hedges | 12,595.9 | 116.1 | (153.3 | ) | 13,159.8 | 95.6 | (103.3 | ) | |||||||||||||||||||
Total Hedges | $ | 13,371.1 | $ | 124.9 | $ | (155.4 | ) | $ | 13,947.4 | $ | 141.1 | $ | (103.6 | ) |
(1) | Presented on a gross basis. |
(2) | Fair value balances include accrued interest. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
n | CIT’s funding costs for similar financings based on current market conditions; |
n | Forecasted usage of the long-dated facilities through the final maturity date in 2028; and |
n | Forecasted amortization, due to principal payments on the underlying ABS, which impacts the amount of the unutilized portion. |
Offsetting of Derivative Assets and Liabilities(dollars in millions)
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 | |||||||||||||||||||||
September 30, 2016 | ||||||||||||||||||||||||||
Derivative assets | $ | 124.9 | $ | – | $ | 124.9 | $ | (6.3 | ) | $ | (11.9 | ) | $ | 106.7 | ||||||||||||
Derivative liabilities | (155.4 | ) | – | (155.4 | ) | 6.3 | 93.3 | (55.8 | ) | |||||||||||||||||
December 31, 2015 | ||||||||||||||||||||||||||
Derivative assets | $ | 141.1 | $ | – | $ | 141.1 | $ | (9.7 | ) | $ | (82.7 | ) | $ | 48.7 | ||||||||||||
Derivative liabilities | (103.6 | ) | – | (103.6 | ) | 9.7 | 31.8 | (62.1 | ) |
(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 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 of one of the counterparties. |
(2) | Collateral pledged or received is included in Other assets or Other liabilities, respectively. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Derivative Instrument Gains and Losses(dollars in millions)
Quarters Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Instruments | Gain / (Loss) Recognized | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non Qualifying Hedges | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate swaps | Other income | $ | 2.4 | $ | (2.2 | ) | $ | (0.6 | ) | $ | (1.1 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate options | Other income | 0.1 | 1.2 | 0.5 | 1.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency forward contracts | Other income | 1.4 | 43.8 | (10.9 | ) | 84.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity warrants | Other income | 0.1 | – | (0.2 | ) | 0.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Return Swap (TRS) | Other income | (19.7 | ) | (24.3 | ) | 7.1 | (31.7 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Rate Lock Commitments | Other income | 0.2 | – | 0.3 | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forward Sale Commitments on Agency MBS | Other income | (0.1 | ) | – | (0.1 | ) | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit Derivatives | Other income | 0.2 | – | 1.4 | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Non-qualifying Hedges | $ | (15.4 | ) | $ | 18.5 | $ | (2.5 | ) | $ | 52.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total derivatives-income statement impact | $ | (15.4 | ) | $ | 18.5 | $ | (2.5 | ) | $ | 52.9 |
Changes in AOCI Relating to Derivatives(dollars in millions)
Contract Type | Derivatives - effective portion reclassified from AOCI to income | Hedge ineffectiveness recorded directly in income | Total income statement impact | Derivatives - effective portion recorded in OCI | Total change in OCI for period | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Quarter Ended September 30, 2016 | |||||||||||||||||||||||
Foreign currency forward contracts — net investment hedges | $ | – | $ | – | $ | – | $ | 4.2 | $ | 4.2 | |||||||||||||
Total | $ | – | $ | – | $ | – | $ | 4.2 | $ | 4.2 | |||||||||||||
Quarter Ended September 30, 2015 | |||||||||||||||||||||||
Foreign currency forward contracts — net investment hedges | $ | 4.3 | $ | – | $ | 4.3 | $ | 44.0 | $ | 39.7 | |||||||||||||
Total | $ | 4.3 | $ | – | $ | 4.3 | $ | 44.0 | $ | 39.7 | |||||||||||||
Nine Months Ended September 30, 2016 | |||||||||||||||||||||||
Foreign currency forward contracts — net investment hedges | $ | 1.8 | $ | – | $ | 1.8 | $ | (28.1 | ) | $ | (29.9 | ) | |||||||||||
Total | $ | 1.8 | $ | – | $ | 1.8 | $ | (28.1 | ) | $ | (29.9 | ) | |||||||||||
Nine Months Ended September 30, 2015 | |||||||||||||||||||||||
Foreign currency forward contracts — net investment hedges | $ | 8.5 | $ | – | $ | 8.5 | $ | 106.3 | $ | 97.8 | |||||||||||||
Total | $ | 8.5 | $ | – | $ | 8.5 | $ | 106.3 | $ | 97.8 |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Assets and Liabilities Measured at Fair Value on a Recurring Basis(dollars in millions)
Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | |||||||||||||||||||
Assets | |||||||||||||||||||
Debt Securities AFS | $ | 2,729.2 | $ | – | $ | 2,218.8 | $ | 510.4 | |||||||||||
Securities carried at fair value with changes recorded in net income | 301.3 | – | – | 301.3 | |||||||||||||||
Equity Securities AFS | 34.8 | 0.2 | 34.6 | – | |||||||||||||||
FDIC receivable | 49.3 | – | – | 49.3 | |||||||||||||||
Derivative assets at fair value — non-qualifying hedges(1) | 116.1 | – | 115.7 | 0.4 | |||||||||||||||
Derivative assets at fair value — qualifying hedges | 8.8 | – | 8.8 | – | |||||||||||||||
Total | $ | 3,239.5 | $ | 0.2 | $ | 2,377.9 | $ | 861.4 | |||||||||||
Liabilities | |||||||||||||||||||
Derivative liabilities at fair value — non-qualifying hedges(1) | $ | (153.3 | ) | $ | – | $ | (105.0 | ) | $ | (48.3 | ) | ||||||||
Derivative liabilities at fair value — qualifying hedges | (2.1 | ) | – | (2.1 | ) | – | |||||||||||||
Consideration holdback liability | (47.0 | ) | – | – | (47.0 | ) | |||||||||||||
FDIC True-up Liability | (61.3 | ) | – | – | (61.3 | ) | |||||||||||||
Total | $ | (263.7 | ) | $ | – | $ | (107.1 | ) | $ | (156.6 | ) | ||||||||
December 31, 2015 | |||||||||||||||||||
Assets | |||||||||||||||||||
Debt Securities AFS | $ | 2,007.8 | $ | – | $ | 1,440.7 | $ | 567.1 | |||||||||||
Securities carried at fair value with changes recorded in net income | 339.7 | – | – | 339.7 | |||||||||||||||
Equity Securities AFS(2) | 14.3 | 0.3 | 14.0 | – | |||||||||||||||
FDIC receivable | 54.8 | – | – | 54.8 | |||||||||||||||
Derivative assets at fair value — non-qualifying hedges(1) | 95.6 | – | 95.6 | – | |||||||||||||||
Derivative assets at fair value — qualifying hedges | 45.5 | – | 45.5 | – | |||||||||||||||
Total | $ | 2,557.7 | $ | 0.3 | $ | 1,595.8 | $ | 961.6 | |||||||||||
Liabilities | |||||||||||||||||||
Derivative liabilities at fair value — non-qualifying hedges(1) | $ | (103.3 | ) | $ | – | $ | (47.8 | ) | $ | (55.5 | ) | ||||||||
Derivative liabilities at fair value — qualifying hedges | (0.3 | ) | – | (0.3 | ) | – | |||||||||||||
Consideration holdback liability | (60.8 | ) | – | – | (60.8 | ) | |||||||||||||
FDIC True-up Liability | (56.9 | ) | – | – | (56.9 | ) | |||||||||||||
Total | $ | (221.3 | ) | $ | – | $ | (48.1 | ) | $ | (173.2 | ) |
(1) | Derivative fair values include accrued interest |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Quantitative Information about Level 3 Fair Value Measurements — Recurring(dollars in millions)
Financial Instrument | Estimated Fair Value | Valuation Technique(s) | Significant Unobservable Inputs | Range of Inputs | Weighted Average | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||
Securities — AFS | $ | 510.4 | Discounted cash flow | Discount Rate | 2.7% – 81.4% | 5.3% | |||||||||||||||||
Prepayment Rate | 1.7% – 20.6% | 9.1% | |||||||||||||||||||||
Default Rate | 0.0% – 12.8% | 4.1% | |||||||||||||||||||||
Loss Severity | 0.2% – 75.2% | 36.1% | |||||||||||||||||||||
Securities carried at fair value with changes recorded in net income | 301.3 | Discounted cash flow | Discount Rate | 0.0% – 37.8% | 5.4% | ||||||||||||||||||
Prepayment Rate | 5.4% – 35.8% | 11.9% | |||||||||||||||||||||
Default Rate | 0.0% – 6.3% | 4.0% | |||||||||||||||||||||
Loss Severity | 7.3% – 42.9% | 24.7% | |||||||||||||||||||||
FDIC Receivable | 49.3 | Discounted cash flow | Discount Rate | 7.8% – 18.4% | 9.4% | ||||||||||||||||||
Prepayment Rate | 2.0% – 14.0% | 3.2% | |||||||||||||||||||||
Default Rate | 6.0% – 36.0% | 10.5% | |||||||||||||||||||||
Loss Severity | 21.6% – 53.2% | 29.2% | |||||||||||||||||||||
Derivative assets — non qualifying | 0.4 | Internal valuation model | Borrower Rate | 2.9% – 4.5% | 3.6% | ||||||||||||||||||
Total Assets | $ | 861.4 | |||||||||||||||||||||
Liabilities | |||||||||||||||||||||||
FDIC True-up liability | $ | (61.3 | ) | Discounted cash flow | Discount Rate | 3.2 % – 3.2% | 3.2% | ||||||||||||||||
Consideration holdback liability | (47.0 | ) | Discounted cash flow | Payment Probability | 0.0% – 100.0% | 53.8% | |||||||||||||||||
Discount Rate | 1.3% – 4.0% | 2.2% | |||||||||||||||||||||
Derivative liabilities — non qualifying | (48.3 | ) | Market Comparables(1) | ||||||||||||||||||||
Total Liabilities | $ | (156.6 | ) |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Quantitative Information about Level 3 Fair Value Measurements — Recurring (dollars in millions) (continued)
Financial Instrument | Estimated Fair Value | Valuation Technique(s) | Significant Unobservable Inputs | Range of Inputs | Weighted Average | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2015 | ||||||||||||||||||||||
Assets | ||||||||||||||||||||||
Securities — AFS | $ | 567.1 | Discounted cash flow | Discount Rate | 0.0% – 94.5% | 6.4% | ||||||||||||||||
Prepayment Rate | 2.7% – 20.8% | 9.2% | ||||||||||||||||||||
Default Rate | 0.0% – 9.5% | 4.1% | ||||||||||||||||||||
Loss Severity | 0.2% – 83.5% | 36.4% | ||||||||||||||||||||
Securities carried at fair value with changes recorded in net income | 339.7 | Discounted cash flow | Discount Rate | 0.0% – 19.9% | 6.3% | |||||||||||||||||
Prepayment Rate | 2.5% – 22.4% | 11.5% | ||||||||||||||||||||
Default Rate | 0.0% – 5.9% | 4.1% | ||||||||||||||||||||
Loss Severity | 3.8% – 39.0% | 25.1% | ||||||||||||||||||||
FDIC Receivable | 54.8 | Discounted cash flow | Discount Rate | 7.8% – 18.4% | 9.4% | |||||||||||||||||
Prepayment Rate | 2.0% – 14.0% | 3.6% | ||||||||||||||||||||
Default Rate | 6.0% – 36.0% | 10.8% | ||||||||||||||||||||
Loss Severity | 20.0% – 65.0% | 31.6% | ||||||||||||||||||||
Total Assets | $ | 961.6 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||
FDIC True-up liability | $ | (56.9 | ) | Discounted cash flow | Discount Rate | 4.1 % – 4.1% | 4.1% | |||||||||||||||
Consideration holdback liability | (60.8 | ) | Discounted cash flow | Payment Probability | 0% – 100% | 53.8% | ||||||||||||||||
Discount Rate | 3.0% – 3.0% | 3.0% | ||||||||||||||||||||
Derivative liabilities — non qualifying | (55.5 | ) | Market Comparables(1) | |||||||||||||||||||
Total Liabilities | $ | (173.2 | ) |
(1) | The valuation of these derivatives is primarily related to the GSI facilities which is based on several factors using a discounted cash flow methodology, including a) funding costs for similar financings based on current market conditions; b) forecasted usage of long-dated facilities through the final maturity date in 2028; and c) forecasted amortization, due to principal payments on the underlying ABS, which impacts the amount of the unutilized portion. |
n | Discounted cash flow — Discounted cash flow valuation techniques generally consist of developing an estimate of future cash flows that are expected to occur over the life of an instrument and then discounting those cash flows at a rate of return that results in the estimated fair value amount. The Company utilizes both the direct and indirect valuation methods. Under the direct method, contractual cash flows are adjusted for expected losses. The adjusted cash flows are discounted at a rate which considers other costs and risks, such as market risk and liquidity. Under the indirect method, contractual cash flows are discounted at a rate which reflects the costs and risks associated with the likelihood of generating the contractual cash flows. |
n | Market comparables — Market comparable(s) pricing valuation techniques are used to determine the estimated fair value of certain instruments by incorporating known inputs such as recent transaction prices, pending transactions, or prices of other similar investments which require significant adjustment to reflect differences in instrument characteristics. |
n | Internal valuation model — The internal model for rate lock valuation uses the spread on borrower mortgage rate and the Fannie Mae pass through rate and applies a conversion factor to assess the derivative value. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
qualitative factors such as nature of the instrument, type of valuation technique used, and the significance of the unobservable inputs on the values relative to other inputs used within the valuation. Following is a description of the significant unobservable inputs provided in the tables.
n | Default rate — is an estimate of the likelihood of not collecting contractual amounts owed expressed as a constant default rate. |
n | Discount rate — is a rate of return used to present value the future expected cash flows to arrive at the estimated fair value of an instrument. The discount rate consists of a benchmark rate component and a risk premium component. The benchmark rate component, for example, LIBOR or U.S. Treasury rates, is generally observable within the market and is necessary to appropriately reflect the time value of money. The risk premium component reflects the amount of compensation market participants require due to the uncertainty inherent in the instruments’ cash flows resulting from risks such as credit and liquidity. |
n | Loss severity — is the percentage of contractual cash flows lost in the event of a default. |
n | Prepayment rate — is the estimated rate at which forecasted prepayments of principal of the related loan or debt instrument are expected to occur, expressed as a constant prepayment rate (“CPR”). |
n | Payment Probability — is an estimate of the likelihood the consideration holdback amount will be required to be paid expressed as a percentage. |
n | Borrower rate — Mortgage rate committed to the borrower by CIT Bank. Effective for up to 90 days. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Changes in Estimated Fair Value of Level 3 Financial Assets and Liabilities Measured on a Recurring Basis(dollars in millions)
Securities- AFS | Securities carried at fair value with changes recorded in net income | FDIC Receivable | Derivative assets- non qualifying(1) | Derivative liabilities- non- qualifying(2) | FDIC True-up Liability | Consideration holdback Liability | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2015 | $ | 567.1 | $ | 339.7 | $ | 54.8 | $ | – | $ | (55.5 | ) | $ | (56.9 | ) | $ | (60.8 | ) | |||||||||||||
Included in earnings | (4.6 | ) | 11.6 | 4.8 | 0.4 | 7.2 | (4.4 | ) | (0.5 | ) | ||||||||||||||||||||
Included in comprehensive income | 22.1 | – | – | – | – | – | – | |||||||||||||||||||||||
Impairment | (2.2 | ) | – | – | – | – | – | – | ||||||||||||||||||||||
Settlements | (72.0 | ) | (50.0 | ) | (10.3 | ) | – | – | – | 14.3 | ||||||||||||||||||||
Balance as of September 30, 2016 | $ | 510.4 | $ | 301.3 | $ | 49.3 | $ | 0.4 | $ | (48.3 | ) | $ | (61.3 | ) | $ | (47.0 | ) | |||||||||||||
December 31, 2014 | $ | – | $ | – | $ | – | $ | – | $ | (26.6 | ) | $ | – | $ | – | |||||||||||||||
Included in earnings | (0.2 | ) | – | 0.7 | – | (30.5 | ) | – | – | |||||||||||||||||||||
Included in comprehensive income | (10.9 | ) | – | – | – | – | – | – | ||||||||||||||||||||||
Purchases | 992.8 | – | 54.8 | – | – | (56.3 | ) | (60.8 | ) | |||||||||||||||||||||
Settlements | (29.2 | ) | – | (1.3 | ) | – | – | – | – | |||||||||||||||||||||
Balance as of September 30, 2015 | $ | 952.5 | $ | – | $ | 54.2 | $ | – | $ | (57.1 | ) | $ | (56.3 | ) | $ | (60.8 | ) |
(1) | Valuation of Interest Rate Lock Commitments. |
(2) | Primarily includes the valuation of the derivatives related to the TRS facilities and written options on certain CIT Bank CDs. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Carrying Value of Assets Measured at Fair Value on a Non-recurring Basis(dollars in millions)
Fair Value Level at Reporting Date | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total Carrying Value | Level 1 | Level 2 | Level 3 | Total (Losses) | |||||||||||||||||||
Assets | |||||||||||||||||||||||
September 30, 2016 | |||||||||||||||||||||||
Assets held for sale | $ | 1,598.0 | $ | – | $ | 3.7 | $ | 1,594.3 | $ | (41.2 | ) | ||||||||||||
Other real estate owned and repossessed assets | 88.7 | – | – | 88.7 | (5.8 | ) | |||||||||||||||||
Impaired loans | 125.6 | – | – | 125.6 | (20.0 | ) | |||||||||||||||||
Total | $ | 1,812.3 | $ | – | $ | 3.7 | $ | 1,808.6 | $ | (67.0 | ) | ||||||||||||
December 31, 2015 | |||||||||||||||||||||||
Assets held for sale | $ | 1,648.3 | $ | – | $ | 31.0 | $ | 1,617.3 | $ | (32.0 | ) | ||||||||||||
Other real estate owned and repossessed assets | 127.3 | – | – | 127.3 | (5.7 | ) | |||||||||||||||||
Impaired loans | 127.6 | – | – | 127.6 | (21.9 | ) | |||||||||||||||||
Total | $ | 1,903.2 | $ | – | $ | 31.0 | $ | 1,872.2 | $ | (59.6 | ) |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
FDIC Receivable(dollars in millions)
September 30, 2016 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Estimated Fair Value Carrying Amount | Aggregate Unpaid Principal | Difference Between Estimated Fair Value and Aggregate Unpaid Principal Balance | ||||||||||||
FDIC Receivable | $ | 49.3 | $ | 178.8 | $ | 129.4 |
December 31, 2015 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Estimated Fair Value Carrying Amount | Aggregate Unpaid Principal | Difference Between Estimated Fair Value and Aggregate Unpaid Principal Balance | ||||||||||||
FDIC Receivable | $ | 54.8 | $ | 204.5 | $ | 149.7 |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Financial Instruments(dollars in millions)
Estimated Fair Value | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Carrying Value | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||
September 30, 2016 | |||||||||||||||||||||||
Financial Assets | |||||||||||||||||||||||
Cash and interest bearing deposits | $ | 7,433.6 | $ | 7,433.6 | $ | – | $ | – | $ | 7,433.6 | |||||||||||||
Derivative assets at fair value — non-qualifying hedges | 116.1 | – | 115.7 | 0.4 | 116.1 | ||||||||||||||||||
Derivative assets at fair value — qualifying hedges | 8.8 | – | 8.8 | – | 8.8 | ||||||||||||||||||
Assets held for sale (excluding leases) | 1,125.3 | – | 164.5 | 968.4 | 1,132.9 | ||||||||||||||||||
Loans (excluding leases) | 27,084.5 | – | 430.0 | 26,431.0 | 26,861.0 | ||||||||||||||||||
Investment securities(1) | 3,592.4 | 0.2 | 2,446.6 | 1,152.5 | 3,599.3 | ||||||||||||||||||
Indemnification assets(2) | 259.7 | – | – | 215.8 | 215.8 | ||||||||||||||||||
Other assets subject to fair value disclosure and unsecured counterparty receivables(3) | 1,094.9 | – | – | 1,094.9 | 1,094.9 | ||||||||||||||||||
Financial Liabilities | |||||||||||||||||||||||
Deposits(4) | (32,883.7 | ) | – | – | (33,145.8 | ) | (33,145.8 | ) | |||||||||||||||
Derivative liabilities at fair value — non-qualifying hedges | (153.3 | ) | – | (105.0 | ) | (48.3 | ) | (153.3 | ) | ||||||||||||||
Derivative liabilities at fair value — qualifying hedges | (2.1 | ) | – | (2.1 | ) | – | (2.1 | ) | |||||||||||||||
Borrowings(4) | (16,667.8 | ) | – | (15,214.2 | ) | (2,069.0 | ) | (17,283.2 | ) | ||||||||||||||
Credit balances of factoring clients | (1,228.9 | ) | – | – | (1,228.9 | ) | (1,228.9 | ) | |||||||||||||||
Other liabilities subject to fair value disclosure(5) | (1,973.2 | ) | – | – | (1,973.2 | ) | (1,973.2 | ) | |||||||||||||||
December 31, 2015 | |||||||||||||||||||||||
Financial Assets | |||||||||||||||||||||||
Cash and interest bearing deposits | $ | 8,301.5 | $ | 8,301.5 | $ | – | $ | – | $ | 8,301.5 | |||||||||||||
Derivative assets at fair value — non-qualifying hedges | 95.6 | – | 95.6 | – | 95.6 | ||||||||||||||||||
Derivative assets at fair value — qualifying hedges | 45.5 | – | 45.5 | – | 45.5 | ||||||||||||||||||
Assets held for sale (excluding leases) | 738.8 | 21.8 | 55.8 | 669.1 | 746.7 | ||||||||||||||||||
Loans (excluding leases) | 28,244.2 | – | 975.5 | 26,509.1 | 27,484.6 | ||||||||||||||||||
Investment securities(1) | 2,953.8 | 11.5 | 1,678.7 | 1,265.0 | 2,955.2 | ||||||||||||||||||
Indemnification assets(2) | 348.4 | – | – | 323.2 | 323.2 | ||||||||||||||||||
Other assets subject to fair value disclosure and unsecured counterparty receivables(3) | 1,004.5 | – | – | 1,004.5 | 1,004.5 | ||||||||||||||||||
Financial Liabilities | |||||||||||||||||||||||
Deposits(4) | (32,813.8 | ) | – | – | (32,972.2 | ) | (32,972.2 | ) | |||||||||||||||
Derivative liabilities at fair value — non-qualifying hedges | (103.3 | ) | – | (47.8 | ) | (55.5 | ) | (103.3 | ) | ||||||||||||||
Derivative counterparty liabilities at fair value | (0.3 | ) | – | (0.3 | ) | – | (0.3 | ) | |||||||||||||||
Borrowings(4) | (18,717.1 | ) | – | (16,358.2 | ) | (2,808.8 | ) | (19,167.0 | ) | ||||||||||||||
Credit balances of factoring clients | (1,344.0 | ) | – | – | (1,344.0 | ) | (1,344.0 | ) | |||||||||||||||
Other liabilities subject to fair value disclosure(5) | (1,943.5 | ) | – | – | (1,943.5 | ) | (1,943.5 | ) |
(1) | Level 3 estimated fair value at September 30, 2016, includes debt securities AFS ($510.4 million), securities carried at fair value with changes recorded in net income ($301.3 million), non-marketable investments ($272.7 million), and debt securities HTM ($68.1 million). Level 3 estimated fair value at December 31, 2015 included debt securities AFS ($567.1 million), debt securities carried at fair value with changes recorded in net income ($339.7 million), non-marketable investments ($291.9 million), and debt securities HTM ($66.3 million). |
(2) | The indemnification assets at September 30, 2016, included in the above table does not include Agency claims indemnification ($102.5 million), as they are not considered financial instruments. The indemnification assets at December 31, 2015 included in the above table does not include Agency claims indemnification ($65.6 million) and Loan indemnification ($0.7 million), as they are not considered financial instruments. |
(3) | 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 TRS. |
(4) | Deposits and borrowings include accrued interest, which is included in “Other liabilities” in the Balance Sheet. |
(5) | 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. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
n | Commercial and Consumer Loans — Of the loan balance above, $430.0 million and $975.5 million at September 30, 2016 and December 31, 2015, respectively, were valued using Level 2 inputs. As there is no liquid secondary market for the other loans in the Company’s portfolio, the fair value is estimated based on discounted cash flow analyses which use Level 3 inputs at both September 30, 2016 and December 31, 2015. In addition to the characteristics of the underlying contracts, key inputs to the analysis include interest rates, prepayment rates, and credit spreads. For the commercial loan portfolio, the market based credit spread inputs are derived from instruments with comparable credit risk characteristics obtained from independent third party vendors. As these Level 3 unobservable inputs are specific to individual loans/collateral types, management does not believe that sensitivity analysis of individual inputs is meaningful, but rather that sensitivity is more meaningfully assessed through the evaluation of aggregate carrying values of the loans. The fair value of loans at September 30, 2016 was $26.9 billion, which was 99.2% of carrying value. The fair value of loans at December 31, 2015 was $27.5 billion, which was 97.3% of carrying value. |
n | Impaired Loans — The value of impaired loans is estimated using the fair value of collateral (on an orderly liquidation basis) if the loan is collateralized, the present value of expected cash flows utilizing the current market rate for such loan, or observable market price. As these Level 3 unobservable inputs are specific to individual loans/collateral types, management does not believe that sensitivity analysis of individual inputs is meaningful, but rather that sensitivity is more meaningfully assessed through the evaluation of aggregate carrying values of impaired loans relative to contractual amounts owed (unpaid principal balance or “UPB”) from customers. As of September 30, 2016, the UPB related to impaired loans totaled $205.1 million. Including related allowances, these loans are carried at $143.4 million, or 69.9% of UPB. Of these amounts, $40.9 million and $20.3 million of UPB and carrying value, respectively, relate to loans with no specific allowance. As of December 31, 2015 the UPB related to impaired loans totaled $172.5 million and including related allowances, these loans were carried at $121.8 million, or 70.6% of UPB. Of these amounts, $33.3 million and $21.9 million of UPB and carrying value, respectively, relate to loans with no specific allowance. The difference between UPB and carrying value reflects cumulative charge-offs on accounts |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
remaining in process of collection, FSA discounts and allowances. SeeNote 3 — Loans for more information. |
n | PCI loans — These loans are valued by grouping the loans into performing and non-performing groups and stratifying the loans based on common risk characteristics such as product type, FICO score and other economic attributes. Due to a lack of observable market data, the estimated fair value of these loan portfolios was based on an internal model using unobservable inputs, including discount rates, prepayment rates, delinquency roll-rates, and loss severities. Due to the significance of the unobservable inputs, these instruments are classified as Level 3. |
n | Jumbo Mortgage Loans — The estimated fair value was determined by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Due to the unobservable nature of the inputs used in deriving the estimated fair value of these instruments, these loans are classified as Level 3. |
n | Unsecured debt — Approximately $10.6 billion par value at September 30, 2016 and $10.7 billion par value at December 31, 2015 were valued using market inputs, which are Level 2 inputs. |
n | Secured borrowings — The title has been conformed to the presentation inNote 8 — Borrowings, whereby secured borrowings includes both structured financings and FHLB Advances. Approximately $4.0 billion par value at September 30, 2016 and $5.1 billion par value at December 31, 2015 were valued using market inputs, which are Level 2 inputs. Where market estimates were not available for approximately $2.0 billion and $2.7 billion par value at September 30, 2016 and December 31, 2015, respectively, values were estimated using a discounted cash flow analysis with a discount rate approximating current market rates for issuances by CIT of similar debt, which are Level 3 inputs. Included in the above, the estimated fair value of FHLB Advances is based on a discounted cash flow model that utilizes benchmark interest rates and other observable market inputs. The discounted cash flow model uses the contractual advance features to determine the cash flows with a zero spread to the forward FHLB curve, which are discounted using observable benchmark interest rates. As the model inputs can be observed in a liquid market and the model does not require significant judgment, FHLB advances are classified as Level 2. |
Components of Accumulated Other Comprehensive Loss(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Gross Unrealized | Income Taxes | Net Unrealized | Gross Unrealized | Income Taxes | Net Unrealized | |||||||||||||||||||||
Foreign currency translation adjustments | $ | (26.8 | ) | $ | (22.6 | ) | $ | (49.4 | ) | $ | (29.8 | ) | $ | (35.9 | ) | $ | (65.7 | ) | ||||||||
Changes in benefit plan net gain (loss) and prior service (cost)/credit | (75.0 | ) | 7.0 | (68.0 | ) | (76.3 | ) | 7.0 | (69.3 | ) | ||||||||||||||||
Unrealized net gains (losses) on available for sale securities | 21.3 | (8.1 | ) | 13.2 | (11.4 | ) | 4.3 | (7.1 | ) | |||||||||||||||||
Total accumulated other comprehensive loss | $ | (80.5 | ) | $ | (23.7 | ) | $ | (104.2 | ) | $ | (117.5 | ) | $ | (24.6 | ) | $ | (142.1 | ) |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Changes in Accumulated Other Comprehensive Loss by Component(dollars in millions)
Foreign currency translation adjustments | Changes in benefit plan net gain (loss) and prior service (cost) credit | Unrealized net gains (losses) on available for sale securities | Total AOCI | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance as of December 31, 2015 | $ | (65.7 | ) | $ | (69.3 | ) | $ | (7.1 | ) | $ | (142.1 | ) | ||||||
AOCI activity before reclassifications | 11.6 | (0.2 | ) | 20.3 | 31.7 | |||||||||||||
Amounts reclassified from AOCI | 4.7 | 1.5 | – | 6.2 | ||||||||||||||
Net current period AOCI | 16.3 | 1.3 | 20.3 | 37.9 | ||||||||||||||
Balance as of September 30, 2016 | $ | (49.4 | ) | $ | (68.0 | ) | $ | 13.2 | $ | (104.2 | ) | |||||||
Balance as of December 31, 2014 | $ | (75.4 | ) | $ | (58.5 | ) | $ | – | $ | (133.9 | ) | |||||||
AOCI activity before reclassifications | (55.6 | ) | (1.7 | ) | (5.9 | ) | (63.2 | ) | ||||||||||
Amounts reclassified from AOCI | 22.2 | 0.6 | – | 22.8 | ||||||||||||||
Net current period AOCI | (33.4 | ) | (1.1 | ) | (5.9 | ) | (40.4 | ) | ||||||||||
Balance as of September 30, 2015 | $ | (108.8 | ) | $ | (59.6 | ) | $ | (5.9 | ) | $ | (174.3 | ) |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Reclassifications Out of Accumulated Other Comprehensive Income(dollars in millions)
Quarters Ended September 30, | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2016 | 2015 | |||||||||||||||||||||||||||||
Gross Amount | Tax | Net Amount | Gross Amount | Tax | Net Amount | Income Statement line item | ||||||||||||||||||||||||
Foreign currency translation adjustments gains (losses) | $ | – | $ | – | $ | – | $ | 19.2 | $ | (0.4 | ) | $ | 18.8 | Other Income | ||||||||||||||||
Changes in benefit plan net gain/(loss) and prior service (cost)/credit gains (losses) | 0.1 | – | 0.1 | 0.7 | (0.2 | ) | 0.5 | Operating Expenses | ||||||||||||||||||||||
Total Reclassifications out of AOCI | $ | 0.1 | $ | – | $ | 0.1 | $ | 19.9 | $ | (0.6 | ) | $ | 19.3 |
Nine Months Ended September 30, | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2016 | 2015 | |||||||||||||||||||||||||||||
Gross Amount | Tax | Net Amount | Gross Amount | Tax | Net Amount | Income Statement line item | ||||||||||||||||||||||||
Foreign currency translation adjustments gains (losses) | $ | 3.6 | $ | 1.1 | $ | 4.7 | $ | 22.6 | $ | (0.4 | ) | $ | 22.2 | Other Income | ||||||||||||||||
Changes in benefit plan net gain/(loss) and prior service (cost)/credit gains (losses) | 1.7 | (0.2 | ) | 1.5 | 0.9 | (0.3 | ) | 0.6 | Operating Expenses | |||||||||||||||||||||
Total Reclassifications out of AOCI | $ | 5.3 | $ | 0.9 | $ | 6.2 | $ | 23.5 | $ | (0.7 | ) | $ | 22.8 |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Tier 1 Capital and Total Capital Components(dollars in millions)
CIT | CIT Bank, N.A. | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | ||||||||||||||||
Tier 1 Capital | |||||||||||||||||||
Total stockholders’ equity(1) | $ | 11,237.0 | $ | 10,978.1 | $ | 5,535.1 | $ | 5,606.4 | |||||||||||
Effect of certain items in accumulated other comprehensive loss excluded from Tier 1 Capital and qualifying noncontrolling interests | 55.3 | 76.9 | (13.3 | ) | 7.0 | ||||||||||||||
Adjusted total equity | 11,292.3 | 11,055.0 | 5,521.8 | 5,613.4 | |||||||||||||||
Less: Goodwill(2) | (1,099.8 | ) | (1,130.8 | ) | (810.3 | ) | (830.8 | ) | |||||||||||
Disallowed deferred tax assets | (804.4 | ) | (904.5 | ) | – | – | |||||||||||||
Disallowed intangible assets(2) | (71.3 | ) | (53.6 | ) | (83.1 | ) | (58.3 | ) | |||||||||||
Other Tier 1 components(3) | (5.8 | ) | (0.1 | ) | – | – | |||||||||||||
Common Equity Tier 1 Capital | 9,311.0 | 8,966.0 | 4,628.4 | 4,724.3 | |||||||||||||||
Tier 1 Capital | 9,311.0 | 8,966.0 | 4,628.4 | 4,724.3 | |||||||||||||||
Tier 2 Capital | |||||||||||||||||||
Qualifying allowance for credit losses and other reserves(4) | 469.3 | 403.3 | 439.5 | 374.7 | |||||||||||||||
Other Tier 2 components(5) | – | – | 0.1 | – | |||||||||||||||
Total qualifying capital | $ | 9,780.3 | $ | 9,369.3 | $ | 5,068.0 | $ | 5,099.0 | |||||||||||
Risk-weighted assets | $ | 66,802.2 | $ | 69,563.6 | $ | 35,239.4 | $ | 36,809.5 | |||||||||||
Common Equity Tier 1 Capital (to risk-weighted assets): | |||||||||||||||||||
Actual | 13.9 | % | 12.9 | % | 13.1 | % | 12.8 | % | |||||||||||
Effective minimum ratios under Basel III guidelines(6) | 5.125 | % | 4.5 | % | 5.125 | % | 4.5 | % | |||||||||||
Tier 1 Capital (to risk-weighted assets): | |||||||||||||||||||
Actual | 13.9 | % | 12.9 | % | 13.1 | % | 12.8 | % | |||||||||||
Effective minimum ratios under Basel III guidelines(6) | 6.625 | % | 6.0 | % | 6.625 | % | 6.0 | % | |||||||||||
Total Capital (to risk-weighted assets): | |||||||||||||||||||
Actual | 14.6 | % | 13.5 | % | 14.4 | % | 13.9 | % | |||||||||||
Effective minimum ratios under Basel III guidelines(6) | 8.625 | % | 8.0 | % | 8.625 | % | 8.0 | % | |||||||||||
Tier 1 Leverage Ratio: | |||||||||||||||||||
Actual | 14.4 | % | 13.5 | % | 10.9 | % | 10.9 | % | |||||||||||
Required minimum ratio for capital adequacy purposes | 4.0 | % | 4.0 | % | 4.0 | % | 4.0 | % |
(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) | September 30th, 2016 amount represents the Volcker Rule requirement of deducting covered funds from equity. This requirement was first implemented in the second quarter of 2016. December 31, 2015 amount includes the Tier 1 capital charge for nonfinancial equity instruments under Basel I. |
(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. |
(6) | Required ratios under Basel III Final Rule in effect as of the reporting date. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
n | $16 million tax expense recorded this quarter related to the establishment of valuation allowances against certain international net deferred tax assets due to the exit of our international non-strategic portfolios, |
n | $14 million tax benefit, including interest and penalties, recorded in the first quarter resulting from favorable actions taken by the tax authorities related to uncertain tax positions taken on certain prior year non-U.S. tax returns, and |
n | Miscellaneous other $6 million of net tax expense items year to date. |
n | $647 million tax benefit recorded in the third quarter corresponding to a reduction to the U.S. federal deferred tax asset valuation allowance after considering the impact on earnings of the OneWest acquisition to support the Company’s ability to utilize the U.S. federal net operating losses, |
n | $29 million tax expense including interest and penalties recorded in the third quarter related to an uncertain tax position taken on certain prior year international tax returns, |
n | $28 million tax expense recorded in the third quarter related to establishment of domestic and international deferred tax liabilities as a result of Management’s decision to no longer assert its intent to indefinitely reinvest its unremitted earnings in China, and |
n | $9 million tax benefit recorded in the prior quarter corresponding to a reduction of certain tax reserves upon the receipt of a favorable tax ruling on an uncertain tax position taken on prior years’ tax returns. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
the future international business operations have made it challenging to reliably project future taxable income. Management will continue to assess the forecast of future taxable income as the business plans for these international reporting entities evolve and evaluate potential tax planning strategies to utilize these net DTAs.
Commitments(dollars in millions)
September 30, 2016 | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Due to Expire | December 31, 2015 | ||||||||||||||||||
Within One Year | After One Year | Total Outstanding | Total Outstanding | ||||||||||||||||
Financing Commitments | |||||||||||||||||||
Financing assets | $ | 1,417.1 | $ | 5,326.1 | $ | 6,743.2 | $ | 7,385.6 | |||||||||||
Letters of credit | |||||||||||||||||||
Standby letters of credit | 31.9 | 197.9 | 229.8 | 315.3 | |||||||||||||||
Other letters of credit | 11.5 | – | 11.5 | 18.3 | |||||||||||||||
Guarantees | |||||||||||||||||||
Deferred purchase agreements | 2,076.5 | – | 2,076.5 | 1,806.5 | |||||||||||||||
Guarantees, acceptances and other recourse obligations | 2.4 | – | 2.4 | 0.7 | |||||||||||||||
Purchase and Funding Commitments | |||||||||||||||||||
Aerospace purchase commitments | 591.2 | 8,346.1 | 8,937.3 | 9,618.1 | |||||||||||||||
Rail and other purchase commitments | 395.9 | 27.8 | 423.7 | 898.2 |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
aircraft remain to be purchased from Airbus, Boeing and Embraer at September 30, 2016. Aircraft deliveries are scheduled periodically through 2020. Commitments exclude unexercised options to order additional aircraft.
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
to date, as of September 30, 2016. In 2016, servicing fees of $7.1 million were billed by CIT to TC-CIT Aviation for the nine months ended September 30, 2016. CIT also made and maintains a minority equity investment in TC-CIT Aviation in the amount of approximately $65 million at September 30, 2016. CTL made and maintains a majority equity interest in the joint venture and is a lender to the companies.
n | Commercial Banking (formerly North America Banking, or “NAB”) no longer includes the Consumer Banking division or the Canadian lending and equipment finance business. Commercial Banking is comprised of three divisions, Commercial Finance, Real Estate Finance, and Business Capital. Business Capital includes the former Equipment Finance and Commercial Services divisions. |
n | Transportation Finance (formerly Transportation & International Finance or “TIF”) no longer includes the China and the U.K. businesses. Transportation Finance is comprised of three divisions, Aerospace, Rail, and Maritime Finance. |
n | Consumer and Community Banking is a new segment that includes Legacy Consumer Mortgages (the former LCM segment) and other banking divisions that were included in the former NAB segment (Consumer Banking, Mortgage Lending, Wealth Management and SBA Lending). |
n | NSP includes businesses that we no longer consider strategic, including those in Canada, China and the recently exited U.K., that had been included in the former NAB and TIF segments. Historical data will also include other businesses and portfolios that have been sold, such as Mexico and Brazil. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Segment Pre-tax Income (Loss)(dollars in millions)
Transportation Finance | Commercial Banking | Consumer and Community Banking | Non-Strategic Portfolios | Corporate & Other | Total CIT | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Quarter Ended September 30, 2016 | |||||||||||||||||||||||||||
Interest income | $ | 51.3 | $ | 285.0 | $ | 102.9 | $ | 22.6 | $ | 28.3 | $ | 490.1 | |||||||||||||||
Interest expense | (146.7 | ) | (76.2 | ) | (1.9 | ) | (12.7 | ) | (41.9 | ) | (279.4 | ) | |||||||||||||||
Provision for credit losses | (5.5 | ) | (39.2 | ) | (1.6 | ) | 0.1 | – | (46.2 | ) | |||||||||||||||||
Rental income on operating leases | 527.9 | 31.9 | – | 3.8 | – | 563.6 | |||||||||||||||||||||
Other income | 6.5 | 65.9 | 7.1 | 4.9 | (10.5 | ) | 73.9 | ||||||||||||||||||||
Depreciation on operating lease equipment | (154.7 | ) | (24.4 | ) | – | – | – | (179.1 | ) | ||||||||||||||||||
Maintenance and other operating lease expenses | (60.4 | ) | – | – | – | – | (60.4 | ) | |||||||||||||||||||
Operating expenses / loss on debt extinguishment and deposit redemption | (61.8 | ) | (161.2 | ) | (87.7 | ) | (11.0 | ) | (15.4 | ) | (337.1 | ) | |||||||||||||||
Income (loss) from continuing operations before (provision) benefit for income taxes | $ | 156.6 | $ | 81.8 | $ | 18.8 | $ | 7.7 | $ | (39.5 | ) | $ | 225.4 | ||||||||||||||
Quarter Ended September 30, 2015 | |||||||||||||||||||||||||||
Interest income | $ | 50.2 | $ | 251.5 | $ | 73.9 | $ | 43.7 | $ | 18.4 | $ | 437.7 | |||||||||||||||
Interest expense | (139.7 | ) | (67.3 | ) | (13.8 | ) | (27.3 | ) | (32.2 | ) | (280.3 | ) | |||||||||||||||
Provision for credit losses | 1.6 | (43.2 | ) | (5.1 | ) | (3.2 | ) | – | (49.9 | ) | |||||||||||||||||
Rental income on operating leases | 505.7 | 24.6 | – | 9.0 | – | 539.3 | |||||||||||||||||||||
Other income | 23.0 | 70.7 | 0.1 | (35.4 | ) | (19.2 | ) | 39.2 | |||||||||||||||||||
Depreciation on operating lease equipment | (137.5 | ) | (18.1 | ) | – | (3.5 | ) | – | (159.1 | ) | |||||||||||||||||
Maintenance and other operating lease expenses | (55.9 | ) | – | – | – | – | (55.9 | ) | |||||||||||||||||||
Operating expenses / loss on debt extinguishment | (53.6 | ) | (146.5 | ) | (59.0 | ) | (26.0 | ) | (49.1 | ) | (334.2 | ) | |||||||||||||||
Income (loss) from continuing operations before (provision) benefit for income taxes | $ | 193.8 | $ | 71.7 | $ | (3.9 | ) | $ | (42.7 | ) | $ | (82.1 | ) | $ | 136.8 |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Segment Pre-tax Income (Loss) (dollars in millions) (continued)
Transportation Finance | Commercial Banking | Consumer and Community Banking | Non-Strategic Portfolios | Corporate & Other | Total CIT | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nine Months Ended September 30, 2016 | |||||||||||||||||||||||||||
Interest income | $ | 153.9 | $ | 861.3 | $ | 311.5 | $ | 70.8 | $ | 83.3 | $ | 1,480.8 | |||||||||||||||
Interest expense | (441.3 | ) | (224.5 | ) | (16.7 | ) | (40.9 | ) | (124.9 | ) | (848.3 | ) | |||||||||||||||
Provision for credit losses | (43.8 | ) | (124.1 | ) | (5.8 | ) | 0.1 | – | (173.6 | ) | |||||||||||||||||
Rental income on operating leases | 1,609.0 | 87.7 | – | 11.6 | – | 1,708.3 | |||||||||||||||||||||
Other income | 37.0 | 182.3 | 26.9 | 26.1 | 6.8 | 279.1 | |||||||||||||||||||||
Depreciation on operating lease equipment | (464.9 | ) | (65.9 | ) | – | – | – | (530.8 | ) | ||||||||||||||||||
Maintenance and other operating lease costs | (181.5 | ) | – | – | – | – | (181.5 | ) | |||||||||||||||||||
Operating expenses / loss on debt extinguishment | (184.7 | ) | (468.3 | ) | (263.2 | ) | (35.2 | ) | (77.4 | ) | (1,028.8 | ) | |||||||||||||||
Income (loss) from continuing operations before (provisions) benefit for income taxes | $ | 483.7 | $ | 248.5 | $ | 52.7 | $ | 32.5 | $ | (112.2 | ) | $ | 705.2 | ||||||||||||||
Select Period End Balances | |||||||||||||||||||||||||||
Loans | $ | 2,224.2 | $ | 20,564.7 | $ | 7,129.3 | $ | – | $ | – | $ | 29,918.2 | |||||||||||||||
Credit balances of factoring clients | – | 1,228.9 | – | – | – | 1,228.9 | |||||||||||||||||||||
Assets held for sale | 1,084.6 | 331.7 | 41.7 | 1,004.1 | – | 2,462.1 | |||||||||||||||||||||
Operating lease equipment, net | 16,606.2 | 348.6 | – | – | – | 16,954.8 | |||||||||||||||||||||
Nine Months Ended September 30, 2015 | |||||||||||||||||||||||||||
Interest income | $ | 137.3 | $ | 618.7 | $ | 73.9 | $ | 145.3 | $ | 27.3 | $ | 1,002.5 | |||||||||||||||
Interest expense | (439.0 | ) | (196.8 | ) | (13.8 | ) | (99.3 | ) | (67.9 | ) | (816.8 | ) | |||||||||||||||
Provision for credit losses | (5.9 | ) | (85.6 | ) | (5.1 | ) | (6.3 | ) | – | (102.9 | ) | ||||||||||||||||
Rental income on operating leases | 1,500.3 | 71.5 | – | 29.8 | – | 1,601.6 | |||||||||||||||||||||
Other income | 72.2 | 201.6 | 0.1 | (42.6 | ) | (42.2 | ) | 189.1 | |||||||||||||||||||
Depreciation on operating lease equipment | (410.1 | ) | (52.8 | ) | – | (10.8 | ) | – | (473.7 | ) | |||||||||||||||||
Maintenance and other operating lease costs | (151.4 | ) | – | – | – | – | (151.4 | ) | |||||||||||||||||||
Operating expenses / loss on debt extinguishment | (184.6 | ) | (410.5 | ) | (59.0 | ) | (97.6 | ) | (59.2 | ) | (810.9 | ) | |||||||||||||||
Income (loss) from continuing operations before (provisions) benefit for income taxes | $ | 518.8 | $ | 146.1 | $ | (3.9 | ) | $ | (81.5 | ) | $ | (142.0 | ) | $ | 437.5 | ||||||||||||
Select Period End Balances | |||||||||||||||||||||||||||
Loans | $ | 3,305.5 | $ | 21,849.5 | $ | 7,251.2 | $ | – | $ | – | $ | 32,406.2 | |||||||||||||||
Credit balances of factoring clients | – | 1,609.3 | – | – | – | 1,609.3 | |||||||||||||||||||||
Assets held for sale | 142.3 | 174.4 | 45.8 | 1,791.8 | – | 2,154.3 | |||||||||||||||||||||
Operating lease equipment, net | 15,287.3 | 250.9 | – | – | – | 15,538.2 |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Goodwill(dollars in millions)
Transportation Finance | Commercial Banking | Consumer and Community Banking | Total | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2015(1) | $ | 245.0 | $ | 579.1 | $ | 374.2 | $ | 1,198.3 | ||||||||||
Additions, Other activity(2) | (7.3 | ) | (8.9 | ) | (11.6 | ) | (27.8 | ) | ||||||||||
September 30, 2016 | $ | 237.7 | $ | 570.2 | $ | 362.6 | $ | 1,170.5 |
(1) | In preparing the interim financial statements for the quarter ended June 30, 2016, the Company discovered and corrected an immaterial error impacting the December 31, 2015 goodwill allocation among Consumer and Community Banking and Commercial Banking in the amount of $23.2 million. The reclassification had no impact on the Company’s Balance Sheet and Statements of Income or Cash Flows for any period. |
(2) | Includes purchase accounting measurement period adjustments in Commercial Banking and Consumer and Community Banking as well as the transfer of assets to held for sale and foreign exchange translation adjustments in Transportation Finance. |
CIT GROUP INC. AND SUBSIDIARIES – NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
approximately $10.0 billion. The Net Asset Value is subject to fluctuation in the ordinary course of business through closing and there can be no assurances as to whether the Net Asset Value at closing will be higher, lower or the same as the Net Asset Value as of June 30, 2016.
Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||
Quantitative and Qualitative Disclosures about Market Risk |
BACKGROUND
1. | Focusing on Core Businesses:Invest in growth and strengthen its capabilities with respect to its primary lending, leasing and depository solutions for small business and middle market customers while we: |
n | Complete the separation of the Commercial Air business by the end of 2016; |
n | Complete the sales of the Canada Equipment Finance and Corporate Finance business and China Equipment Finance business; and |
n | Complete the integration of OneWest Bank by year end. |
2. | Improve Profitability and Return Capital:Achieve a return on tangible common equity (ROTCE) of 10 percent by 2018 by executing on initiatives to: |
n | Reduce operating expenses by $125 million by 2018; |
n | Optimize the size of the BHC and improve funding costs by growing its deposit base and transitioning the deposit mix to lower cost deposits; |
n | Increase net revenue by building out the investment portfolio; |
n | Return excess capital to shareholders, subject to regulatory approvals. |
3. | Maintain Strong Risk Management: The improvement in CIT’s credit ratings reflects the strength of its franchises, robust liquidity and capital positions and the expansion and diversification of deposit funding. Additionally, CIT will: |
n | Maintain strong underwriting standards with focus on appropriate risk adjusted returns throughout cycles and leverage expertise as an asset-backed lender; |
n | Enhance our capital planning process; and |
n | Maintain its culture of compliance and integrity. |
n | We closed the sale of the U.K. Equipment Finance business in the first quarter and closed the sale of the Canada Equipment Finance and Corporate Finance business in October; |
n | Signed a definitive agreement in October to sell our Commercial Air business for $10.0 billion, which represents a 6.7% premium to net assets; |
n | Received a non-objection from the Federal Reserve Bank of New York to return up to $3.3 billion of capital to shareholders that would occur in conjunction with the Commercial Air separation(1) |
n | We maintained our quarterly dividend at $0.15 per share; |
n | We continued to evaluate our businesses for alignment with our strategy to become a leading national middle market bank and transferred all of the business air portfolio to assets held for sale; |
n | We continued to review expenses and operating efficiencies, which resulted in additional organizational streamlining and we expect to be about a third of the way through our $125 million expense savings target by year end; |
n | We closed two offices and continued to combine systems to effect cost savings related to the OneWest Bank acquisition; |
n | Our adjusted return on tangible common equity (“ROTCE”) for the nine months ended September 30, 2016 was 7.58%(2); and |
n | We maintained our strong regulatory capital ratios. |
n | Commercial Banking (formerly North America Banking or “NAB”) no longer includes the Consumer Banking division or the Canadian lending and equipment finance business. Commercial Banking is comprised of three divisions, Commercial Finance, Real Estate Finance, and Business Capital. Business Capital includes the former Equipment Finance and Commercial Services divisions. |
n | Transportation Finance (formerly Transportation & International Finance or “TIF”) no longer includes the China and the U.K. businesses. Transportation Finance is comprised of three divisions, Aerospace (composed of Commercial Air and Business Air), Rail, and Maritime Finance. |
n | Consumer and Community Banking is a new segment that includes Legacy Consumer Mortgages (the former LCM segment) and other banking divisions that were included in the former NAB segment (Consumer Banking, Mortgage Lending, Wealth Management and SBA Lending). |
n | NSP includes businesses that we no longer consider strategic, including those in Canada and China and the recently exited U.K., that had been included in the former NAB and TIF segments. Historical data also include other businesses and portfolios that have been sold, such as Mexico and Brazil. |
(1) | Amended capital plan approval authorizes CIT to return $2.975 billion of common equity from the net proceeds of the Commercial Air sale; additional $0.325 billion contingent upon the issuance of a similar amount of Tier 1 qualifying preferred stock. |
(2) | ROTCE is a non-GAAP measure. See “Non-GAAP Financial Measurements” for reconciliation of non-GAAP to GAAP financial information. |
(3) | Net finance revenue and average earning assets are non-GAAP measures; see “Non-GAAP Financial Measurements” for a reconciliation of non-GAAP to GAAP financial information. |
– | Financing and leasing assets (“FLA”), which includes loans, operating lease equipment and assets held for sale (“AHFS”), were $49.3 billion, down slightly from $49.7 billion at June 30, 2016, reflecting prepayments and asset sales, primarily in the Commercial Finance division of Commercial Banking and $50.4 billion at December 31, 2015, also reflecting sales and run-off of the Non-Strategic Portfolio assets. |
– | Cash (cash and due from banks andinterest bearing deposits) totaled $7.4 billion, down from $8.1 billion at June 30, 2016 and $8.3 billion at December 31, 2015. |
– | Investment securities totaled $3.6 billion, up from about $3.2 billion at June 30, 2016 and $3.0 billion at December 31, 2015, as we redeployed cash at CIT Bank, N.A. into higher-yielding “High Quality Liquid Assets.” |
DISCONTINUED OPERATION
(4) | Operating expenses excluding restructuring costs and intangible asset amortization and Net efficiency ratio is a non-GAAP measure. See “Non-GAAP Measurements” for reconciliation of non-GAAP financial information. |
(5) | Net efficiency ratio is a non-GAAP measure. See “Non-GAAP Measurements” for reconciliation of non-GAAP financial information. |
(6) | Total assets from continuing operations is a non-GAAP measure. See “Non-GAAP Measurements” for reconciliation of non-GAAP financial information |
1. | Assets of discontinued operations as of September 30, 2016 of $12.6 billion, which consists primarily of operating lease equipment of $9.6 billion, assets held for sale of $1.1 billion and other assets of $1.8 billion. |
2. | Net finance revenue for the quarter and nine months ended September 30, 2016 of approximately $120 million and $340 million, respectively. |
3. | Pretax income for the quarter and nine months ended September 30, 2016 of approximately $85 million and $260 million, respectively. |
NET FINANCE REVENUE
Net Finance Revenue(1)(dollars in millions)
Quarters Ended | Nine Months Ended | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||||||
Interest income | $ | 490.1 | $ | 495.3 | $ | 437.7 | $ | 1,480.8 | $ | 1,002.5 | ||||||||||||
Rental income on operating leases | 563.6 | 569.3 | 539.3 | 1,708.3 | 1,601.6 | |||||||||||||||||
Finance revenue | 1,053.7 | 1,064.6 | 977.0 | 3,189.1 | 2,604.1 | |||||||||||||||||
Interest expense | (279.4 | ) | (282.5 | ) | (280.3 | ) | (848.3 | ) | (816.8 | ) | ||||||||||||
Depreciation on operating lease equipment | (179.1 | ) | (176.4 | ) | (159.1 | ) | (530.8 | ) | (473.7 | ) | ||||||||||||
Maintenance and other operating lease expenses | (60.4 | ) | (64.9 | ) | (55.9 | ) | (181.5 | ) | (151.4 | ) | ||||||||||||
Net finance revenue | $ | 534.8 | $ | 540.8 | $ | 481.7 | $ | 1,628.5 | $ | 1,162.2 | ||||||||||||
Average Earning Assets (“AEA”) | $ | 59,005.4 | $ | 59,229.2 | $ | 52,448.1 | $ | 59,118.2 | $ | 45,142.9 | ||||||||||||
Net finance margin | 3.63 | % | 3.65 | % | 3.67 | % | 3.67 | % | 3.43 | % |
(1) | NFR and AEA are non-GAAP measures; see “Non-GAAP Financial Measurements” sections for a reconciliation of non-GAAP to GAAP financial information. |
asset composition includes a high level of operating lease equipment (28% of AEA for the quarter ended September 30, 2016), NFM is a more appropriate metric for CIT than net interest margin (“NIM”) (a common metric used by other BHCs), as NIM does not fully reflect the earnings of our portfolio because it includes the impact of debt costs on all our assets but excludes the net revenue (rental income less depreciation, maintenance and other operating lease expenses) from operating leases. As discussed further in this section, our operating lease portfolio consists primarily of aerospace and rail assets. The sale of the Commercial Air business will lessen the impact of the operating lease portfolio on the NFR and NFM.
Average Balances and Rates(1) for the Quarters Ended(dollars in millions)
September 30, 2016 | June 30, 2016 | September 30, 2015 | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Average Balance | Revenue / Expense | Average Rate (%) | Average Balance | Revenue / Expense | Average Rate (%) | Average Balance | Revenue / Expense | Average Rate (%) | ||||||||||||||||||||||||||||||
Interest bearing cash | $ | 6,916.0 | $ | 9.5 | 0.55 | % | $ | 7,113.5 | $ | 8.9 | 0.50 | % | $ | 5,812.4 | $ | 4.5 | 0.31 | % | ||||||||||||||||||||
Securities purchased under agreements to resell | – | – | – | – | – | – | 387.5 | 0.6 | 0.62 | % | ||||||||||||||||||||||||||||
Investment securities | 3,411.1 | 23.0 | 2.70 | % | 3,130.6 | 22.8 | 2.91 | % | 2,663.2 | 18.4 | 2.76 | % | ||||||||||||||||||||||||||
Loans (including held for sale and credit balances of factoring clients)(2),(3) | 31,275.4 | 461.8 | 5.91 | % | 31,679.8 | 472.2 | 5.96 | % | 27,834.3 | 413.9 | 5.95 | % | ||||||||||||||||||||||||||
Operating lease equipment, net (including held for sale)(4) | 17,036.6 | 324.1 | 7.61 | % | 16,925.5 | 328.0 | 7.75 | % | 15,445.1 | 324.3 | 8.40 | % | ||||||||||||||||||||||||||
Indemnification assets | 366.3 | (4.2 | ) | (4.59 | )% | 379.8 | (8.6 | ) | (9.06 | )% | 305.6 | 0.3 | 0.39 | % | ||||||||||||||||||||||||
Average earning assets(2) | $ | 59,005.4 | 814.2 | 5.52 | % | $ | 59,229.2 | 823.3 | 5.56 | % | $ | 52,448.1 | 762.0 | 5.81 | % | |||||||||||||||||||||||
Interest-bearing deposits | $ | 31,732.9 | $ | 99.4 | 1.25 | % | $ | 31,643.5 | $ | 99.4 | 1.26 | % | $ | 26,220.3 | $ | 89.7 | 1.37 | % | ||||||||||||||||||||
Borrowings | 17,117.2 | 180.0 | 4.21 | % | 17,853.7 | 183.1 | 4.10 | % | 18,148.4 | 190.6 | 4.20 | % | ||||||||||||||||||||||||||
Total interest-bearing liabilities | $ | 48,850.1 | 279.4 | 2.29 | % | $ | 49,497.2 | 282.5 | 2.28 | % | $ | 44,368.7 | 280.3 | 2.53 | % | |||||||||||||||||||||||
NFR and NFM | $ | 534.8 | 3.63 | % | $ | 540.8 | 3.65 | % | $ | 481.7 | 3.67 | % |
September 2016 Over June 2016 Comparison | September 2016 Over September 2015 Comparison | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Increase (Decrease) Due To Change In: | Increase (Decrease) Due To Change In: | |||||||||||||||||||||||||
Volume | Rate | Net | Volume | Rate | Net | |||||||||||||||||||||
Interest bearing cash | $ | (0.3 | ) | $ | 0.9 | $ | 0.6 | $ | 1.5 | $ | 3.5 | $ | 5.0 | |||||||||||||
Securities purchased under agreements to resell | – | – | – | – | (0.6 | ) | (0.6 | ) | ||||||||||||||||||
Investments | 1.9 | (1.7 | ) | 0.2 | 5.1 | (0.5 | ) | 4.6 | ||||||||||||||||||
Loans (including held for sale and net of credit balances of factoring clients)(2),(3) | (6.0 | ) | (4.4 | ) | (10.4 | ) | 50.9 | (3.0 | ) | 47.9 | ||||||||||||||||
Operating lease equipment, net (including held for sale)(4) | 2.1 | (6.0 | ) | (3.9 | ) | 30.3 | (30.5 | ) | (0.2 | ) | ||||||||||||||||
Indemnification assets | 0.2 | 4.2 | 4.4 | (0.7 | ) | (3.8 | ) | (4.5 | ) | |||||||||||||||||
Total earning assets | $ | (2.1 | ) | $ | (7.0 | ) | $ | (9.1 | ) | $ | 87.1 | $ | (34.9 | ) | $ | 52.2 | ||||||||||
Interest-bearing deposits | $ | 0.3 | $ | (0.3 | ) | $ | – | $ | 17.2 | $ | (7.5 | ) | $ | 9.7 | ||||||||||||
Borrowings | (7.8 | ) | 4.7 | (3.1 | ) | (10.9 | ) | 0.3 | (10.6 | ) | ||||||||||||||||
Total interest-bearing liabilities | $ | (7.5 | ) | $ | 4.4 | $ | (3.1 | ) | $ | 6.3 | $ | (7.2 | ) | $ | (0.9 | ) |
(1) | Average rates are impacted by purchase accounting accretion and amortization. |
(2) | The balance and 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. |
Borrowing Mix
September 30, 2016 | December 31, 2015 | September 30, 2015 | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Deposits | 66 | % | 64 | % | 63 | % | |||||||||
Unsecured | 22 | % | 21 | % | 21 | % | |||||||||
Secured Borrowings: | |||||||||||||||
Structured financings | 7 | % | 9 | % | 10 | % | |||||||||
FHLB Advances | 5 | % | 6 | % | 6 | % |
Interest-Bearing Deposits and Borrowings Average Balances and Rates for the Quarters Ended(dollars in millions)
Quarter Ended September 30, 2016 | Quarter Ended June 30, 2016 | Quarter Ended September 30, 2015 | |||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Average Balance | Interest Expense | Rate % | Average Balance | Interest Expense | Rate % | Average Balance | Interest Expense | Rate % | |||||||||||||||||||||||||||||||
Interest-Bearing Deposits | |||||||||||||||||||||||||||||||||||||||
CDs | $ | 18,139.4 | $ | 72.6 | 1.60 | % | $ | 18,397.7 | $ | 74.7 | 1.63 | % | $ | 15,566.7 | $ | 67.6 | 1.74 | % | |||||||||||||||||||||
Interest-bearing checking | 3,299.6 | 4.3 | 0.52 | % | 3,007.8 | 3.8 | 0.51 | % | 2,037.6 | 2.6 | 0.51 | % | |||||||||||||||||||||||||||
Savings | 4,386.2 | 9.7 | 0.88 | % | 4,568.9 | 9.8 | 0.86 | % | 4,472.8 | 11.0 | 0.98 | % | |||||||||||||||||||||||||||
Money markets / sweeps(1) | 5,907.7 | 12.8 | 0.87 | % | 5,669.1 | 11.1 | 0.78 | % | 4,143.2 | 8.5 | 0.82 | % | |||||||||||||||||||||||||||
Total interest-bearing deposits(2) | 31,732.9 | 99.4 | 1.25 | % | 31,643.5 | 99.4 | 1.26 | % | 26,220.3 | 89.7 | 1.37 | % | |||||||||||||||||||||||||||
Borrowings | |||||||||||||||||||||||||||||||||||||||
Unsecured notes | 10,593.2 | 137.7 | 5.20 | % | 10,589.3 | 137.6 | 5.20 | % | 10,684.3 | 138.7 | 5.19 | % | |||||||||||||||||||||||||||
Secured borrowings | 3,758.9 | 36.4 | 3.87 | % | 4,121.2 | 39.3 | 3.81 | % | 5,469.4 | 50.2 | 3.67 | % | |||||||||||||||||||||||||||
FHLB advances | 2,765.1 | 5.9 | 0.85 | % | 3,143.2 | 6.2 | 0.79 | % | 1,994.7 | 1.7 | 0.34 | % | |||||||||||||||||||||||||||
Total borrowings | 17,117.2 | 180.0 | 4.21 | % | 17,853.7 | 183.1 | 4.10 | % | 18,148.4 | 190.6 | 4.20 | % | |||||||||||||||||||||||||||
Total interest-bearing liabilities | $ | 48,850.1 | $ | 279.4 | 2.29 | % | $ | 49,497.2 | $ | 282.5 | 2.28 | % | $ | 44,368.7 | $ | 280.3 | 2.53 | % |
Total Deposits Average Balances and Rates for the Quarters Ended(dollars in millions)
September 30, 2016 | June 30, 2016 | September 30, 2015 | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Average Balance | Interest Expense | Average Rate (%) | Average Balance | Interest Expense | Average Rate (%) | Average Balance | Interest Expense | Average Rate (%) | ||||||||||||||||||||||||||||||
Interest bearing deposits | $ | 31,732.9 | $ | 99.4 | 1.25 | % | $ | 31,643.5 | $ | 99.4 | 1.26 | % | $ | 26,220.3 | $ | 89.7 | 1.37 | % | ||||||||||||||||||||
Non-interest bearing deposits | 1,197.4 | – | – | 1,124.9 | – | – | 739.8 | – | – | |||||||||||||||||||||||||||||
Total deposits | $ | 32,930.3 | $ | 99.4 | 1.21 | % | $ | 32,768.4 | $ | 99.4 | 1.21 | % | $ | 26,960.1 | $ | 89.7 | 1.33 | % |
(1) | Includes deposit sweep arrangements related to money market and healthcare savings accounts. |
(2) | Average balance excludes non-interest-bearing deposits such as escrow accounts, security deposits, and other similar accounts, therefore totals may differ from other average balances included in this document. |
Segment Average Yield and Other Data(dollars in millions)
Quarters Ended | Nine Months Ended | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||||||||||
Commercial Banking | |||||||||||||||||||||||
AEA | $ | 20,385.1 | $ | 20,575.1 | $ | 18,724.0 | $ | 20,526.5 | $ | 15,846.5 | |||||||||||||
NFR | 216.3 | 221.7 | 190.7 | 658.6 | 440.6 | ||||||||||||||||||
Gross yield | 6.22 | % | 6.18 | % | 5.90 | % | 6.16 | % | 5.81 | % | |||||||||||||
NFM | 4.24 | % | 4.31 | % | 4.07 | % | 4.28 | % | 3.71 | % | |||||||||||||
AEA | |||||||||||||||||||||||
Commercial Finance | $ | 8,861.0 | $ | 9,260.5 | $ | 8,906.7 | $ | 9,212.2 | $ | 7,480.2 | |||||||||||||
Real Estate Finance | 5,503.2 | 5,453.8 | 3,991.0 | 5,423.7 | 2,551.8 | ||||||||||||||||||
Business Capital | 6,020.9 | 5,860.8 | 5,826.3 | 5,890.6 | 5,814.5 | ||||||||||||||||||
Gross yield | |||||||||||||||||||||||
Commercial Finance | 5.31 | % | 5.38 | % | 4.87 | % | 5.24 | % | 4.58 | % | |||||||||||||
Real Estate Finance | 5.13 | % | 5.18 | % | 5.08 | % | 5.26 | % | 4.54 | % | |||||||||||||
Business Capital | 8.54 | % | 8.38 | % | 8.03 | % | 8.44 | % | 7.94 | % |
Segment Average Yield and Other Data(dollars in millions) (continued)
Quarters Ended | Nine Months Ended | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||||||||||
Commercial Banking (continued) | |||||||||||||||||||||||
NFR | |||||||||||||||||||||||
Commercial Finance | $ | 88.5 | $ | 94.5 | $ | 79.9 | $ | 273.6 | $ | 169.0 | |||||||||||||
Real Estate Finance | 51.5 | 51.6 | 37.1 | 157.5 | 58.2 | ||||||||||||||||||
Business Capital | 76.3 | 75.6 | 73.7 | 227.5 | 213.4 | ||||||||||||||||||
NFM | |||||||||||||||||||||||
Commercial Finance | 4.00 | % | 4.08 | % | 3.59 | % | 3.96 | % | 3.01 | % | |||||||||||||
Real Estate Finance | 3.74 | % | 3.78 | % | 3.72 | % | 3.87 | % | 3.04 | % | |||||||||||||
Business Capital | 5.07 | % | 5.16 | % | 5.06 | % | 5.15 | % | 4.89 | % | |||||||||||||
Transportation Finance | |||||||||||||||||||||||
AEA | $ | 20,953.0 | $ | 20,945.7 | $ | 19,009.2 | $ | 20,818.5 | $ | 18,972.2 | |||||||||||||
NFR | 217.4 | 220.2 | 222.8 | 675.2 | 637.1 | ||||||||||||||||||
Gross yield | 11.06 | % | 11.20 | % | 11.70 | % | 11.29 | % | 11.51 | % | |||||||||||||
NFM | 4.15 | % | 4.21 | % | 4.69 | % | 4.32 | % | 4.48 | % | |||||||||||||
AEA | |||||||||||||||||||||||
Aerospace | $ | 12,180.5 | $ | 12,255.8 | $ | 11,251.2 | $ | 12,143.7 | $ | 11,614.2 | |||||||||||||
Rail | 7,164.1 | 7,036.7 | 6,314.7 | 7,025.5 | 6,123.3 | ||||||||||||||||||
Maritime Finance | 1,608.4 | 1,653.2 | 1,443.3 | 1,649.3 | 1,234.7 | ||||||||||||||||||
Gross yield | |||||||||||||||||||||||
Aerospace | 11.04 | % | 10.87 | % | 10.98 | % | 11.04 | % | 10.58 | % | |||||||||||||
Rail | 12.38 | % | 13.16 | % | 14.50 | % | 13.08 | % | 14.58 | % | |||||||||||||
Maritime Finance | 5.30 | % | 5.30 | % | 5.04 | % | 5.45 | % | 5.04 | % | |||||||||||||
NFR | |||||||||||||||||||||||
Aerospace | $ | 124.8 | $ | 110.6 | $ | 111.2 | $ | 355.0 | $ | 311.9 | |||||||||||||
Rail | 77.5 | 94.0 | 98.7 | 271.7 | 293.0 | ||||||||||||||||||
Maritime Finance | 15.1 | 15.6 | 12.9 | 48.5 | 32.2 | ||||||||||||||||||
NFM | |||||||||||||||||||||||
Aerospace | 4.10 | % | 3.61 | % | 3.95 | % | 3.90 | % | 3.58 | % | |||||||||||||
Rail | 4.33 | % | 5.34 | % | 6.25 | % | 5.16 | % | 6.38 | % | |||||||||||||
Maritime Finance | 3.76 | % | 3.77 | % | 3.58 | % | 3.92 | % | 3.48 | % | |||||||||||||
Consumer and Community Banking | |||||||||||||||||||||||
AEA | $ | 7,658.1 | $ | 7,728.6 | $ | 5,127.5 | $ | 7,711.9 | $ | 1,728.5 | |||||||||||||
NFR | 101.0 | 99.5 | 60.1 | 294.8 | 60.1 | ||||||||||||||||||
Gross yield | 5.37 | % | 5.46 | % | 5.76 | % | 5.39 | % | 5.70 | % | |||||||||||||
NFM | 5.28 | % | 5.15 | % | 4.69 | % | 5.10 | % | 4.64 | % | |||||||||||||
AEA | |||||||||||||||||||||||
Other Consumer Banking | $ | 2,175.1 | $ | 2,071.7 | $ | 1,170.0 | $ | 2,060.5 | $ | 394.8 | |||||||||||||
Legacy Consumer Mortgages | 5,483.0 | 5,656.9 | 3,957.5 | 5,651.4 | 1,333.7 | ||||||||||||||||||
Gross yield | |||||||||||||||||||||||
Other Consumer Banking | 3.52 | % | 3.58 | % | 3.48 | % | 3.59 | % | 3.44 | % | |||||||||||||
Legacy Consumer Mortgages | 6.11 | % | 6.15 | % | 6.44 | % | 6.04 | % | 6.37 | % | |||||||||||||
NFR | |||||||||||||||||||||||
Other Consumer Banking | $ | 40.5 | $ | 37.1 | $ | 13.3 | $ | 111.6 | $ | 13.3 | |||||||||||||
Legacy Consumer Mortgages | 60.5 | 62.4 | 46.8 | 183.2 | 46.8 |
Segment Average Yield and Other Data(dollars in millions) (continued)
Quarters Ended | Nine Months Ended | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||||||
Consumer and Community Banking (continued) | ||||||||||||||||||||||
NFM | ||||||||||||||||||||||
Other Consumer Banking | 7.45 | % | 7.16 | % | 4.56 | % | 7.22 | % | 4.49 | % | ||||||||||||
Legacy Consumer Mortgages | 4.41 | % | 4.41 | % | 4.73 | % | 4.32 | % | 4.68 | % | ||||||||||||
Non-Strategic Portfolios | ||||||||||||||||||||||
AEA | $ | 1,283.8 | $ | 1,384.5 | $ | 2,284.3 | $ | 1,398.7 | $ | 2,514.6 | ||||||||||||
NFR | 13.7 | 13.5 | 21.9 | 41.5 | 65.0 | |||||||||||||||||
Gross yield | 8.23 | % | 7.86 | % | 9.23 | % | 7.85 | % | 9.28 | % | ||||||||||||
NFM | 4.27 | % | 3.90 | % | 3.83 | % | 3.96 | % | 3.45 | % |
Purchase Accounting Accretion (PAA)(dollars in millions)
Quarters Ended | |||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | |||||||||||||||||||||||||||||||||||||
PAA Accretion Recognized in: | PAA Accretion Recognized in: | PAA Accretion Recognized in: | |||||||||||||||||||||||||||||||||||||
Interest Income(1) | Interest Expense(2) | NFR | Interest Income(1) | Interest Expense(2) | NFR | Interest Income(1) | Interest Expense(2) | NFR | |||||||||||||||||||||||||||||||
Commercial Banking | |||||||||||||||||||||||||||||||||||||||
Commercial Finance | $ | 20.4 | $ | 0.4 | $ | 20.8 | $ | 18.5 | $ | 0.6 | $ | 19.1 | $ | 13.6 | $ | 0.8 | $ | 14.4 | |||||||||||||||||||||
Real Estate Finance | 16.4 | – | 16.4 | 18.9 | – | 18.9 | 10.9 | – | 10.9 | ||||||||||||||||||||||||||||||
Total Commercial Banking | $ | 36.8 | $ | 0.4 | $ | 37.2 | $ | 37.4 | $ | 0.6 | $ | 38.0 | $ | 24.5 | $ | 0.8 | $ | 25.3 | |||||||||||||||||||||
Consumer and Community Banking | |||||||||||||||||||||||||||||||||||||||
Other Consumer Banking | $ | 0.3 | $ | 1.9 | $ | 2.2 | $ | 0.2 | $ | 2.4 | $ | 2.6 | $ | (0.8 | ) | $ | 2.6 | $ | 1.8 | ||||||||||||||||||||
Legacy Consumer Mortgages | 26.8 | – | 26.8 | 32.2 | – | 32.2 | 22.1 | – | 22.1 | ||||||||||||||||||||||||||||||
Total Consumer and Community Banking | $ | 27.1 | $ | 1.9 | $ | 29.0 | $ | 32.4 | $ | 2.4 | $ | 34.8 | $ | 21.3 | $ | 2.6 | $ | 23.9 | |||||||||||||||||||||
Corporate and Other | $ | – | $ | 1.0 | $ | 1.0 | $ | – | $ | 1.3 | $ | 1.3 | $ | – | $ | 1.5 | $ | 1.5 | |||||||||||||||||||||
Total CIT | $ | 63.9 | $ | 3.3 | $ | 67.2 | $ | 69.8 | $ | 4.3 | $ | 74.1 | $ | 45.8 | $ | 4.9 | $ | 50.7 |
Purchase Accounting Accretion (PAA)(dollars in millions) (continued)
Nine Months Ended | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | September 30, 2015 | |||||||||||||||||||||||||
PAA Accretion Recognized in: | PAA Accretion Recognized in: | |||||||||||||||||||||||||
Interest Income(1) | Interest Expense(2) | NFR | Interest Income(1) | Interest Expense(2) | NFR | |||||||||||||||||||||
Commercial Banking | ||||||||||||||||||||||||||
Commercial Finance | $ | 57.8 | $ | 1.9 | $ | 59.7 | $ | 13.6 | $ | 0.8 | $ | 14.4 | ||||||||||||||
Real Estate Finance | 55.0 | – | 55.0 | 10.9 | – | 10.9 | ||||||||||||||||||||
Total Commercial Banking | $ | 112.8 | $ | 1.9 | $ | 114.7 | $ | 24.5 | $ | 0.8 | $ | 25.3 | ||||||||||||||
Consumer and Community Banking | ||||||||||||||||||||||||||
Other Consumer Banking | $ | 1.1 | $ | 7.5 | $ | 8.6 | $ | (0.8 | ) | $ | 2.6 | $ | 1.8 | |||||||||||||
Legacy Consumer Mortgages | 85.6 | – | 85.6 | 22.1 | – | 22.1 | ||||||||||||||||||||
Total Consumer and Community Banking | $ | 86.7 | $ | 7.5 | $ | 94.2 | $ | 21.3 | $ | 2.6 | $ | 23.9 | ||||||||||||||
Corporate and Other | $ | – | $ | 3.7 | $ | 3.7 | $ | – | $ | 2.0 | $ | 2.0 | ||||||||||||||
Total CIT | $ | 199.5 | $ | 13.1 | $ | 212.6 | $ | 45.8 | $ | 5.4 | $ | 51.2 |
(1) | Loans acquired in the OneWest Bank acquisition were recorded at a net discount, therefore the purchase accounting accretion of that adjustment increases interest income. |
(2) | Debt and deposits acquired in the OneWest Bank acquisition were recorded at a net premium, therefore the purchase accounting accretion of that adjustment decreases interest expense. |
Net Operating Lease Data(dollars in millions)
Quarters Ended | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | ||||||||||||||||||||||||
Rental income on operating leases | $ | 563.6 | 13.33 | % | $ | 569.3 | 13.57 | % | $ | 539.3 | 14.14 | % | ||||||||||||||
Depreciation on operating lease equipment | (179.1 | ) �� | (4.23 | )% | (176.4 | ) | (4.20 | )% | (159.1 | ) | (4.17 | )% | ||||||||||||||
Maintenance and other operating lease expenses | (60.4 | ) | (1.43 | )% | (64.9 | ) | (1.55 | )% | (55.9 | ) | (1.47 | )% | ||||||||||||||
Net operating lease revenue and % | $ | 324.1 | 7.67 | % | $ | 328.0 | 7.82 | % | $ | 324.3 | 8.50 | % | ||||||||||||||
Average Operating Lease Equipment (“AOL”) | $ | 16,909.4 | $ | 16,781.3 | $ | 15,251.8 |
Nine Months Ended | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | September 30, 2015 | |||||||||||||||||
Rental income on operating leases | $ | 1,708.3 | 13.58 | % | $ | 1,601.6 | 14.19 | % | ||||||||||
Depreciation on operating lease equipment | (530.8 | ) | (4.22 | )% | (473.7 | ) | (4.20 | )% | ||||||||||
Maintenance and other operating lease expenses | (181.5 | ) | (1.44 | )% | (151.4 | ) | (1.34 | )% | ||||||||||
Net operating lease revenue and % | $ | 996.0 | 7.92 | % | $ | 976.5 | 8.65 | % | ||||||||||
Average Operating Lease Equipment (“AOL”) | $ | 16,777.0 | $ | 15,053.4 |
CREDIT METRICS
Allowance for Loan Losses(dollars in millions)
Quarters ended | Nine Months Ended | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||||||
Allowance — beginning of period | $ | 399.4 | $ | 404.6 | $ | 350.9 | $ | 360.2 | $ | 346.4 | ||||||||||||
Provision for credit losses(1) | 46.2 | 28.1 | 49.9 | 173.6 | 102.9 | |||||||||||||||||
Other(1) | (0.5 | ) | 7.7 | (4.5 | ) | 3.6 | (8.6 | ) | ||||||||||||||
Net additions | 45.7 | 35.8 | 45.4 | 177.2 | 94.3 | |||||||||||||||||
Gross charge-offs(2) | (30.5 | ) | (45.1 | ) | (67.4 | ) | (131.7 | ) | (128.2 | ) | ||||||||||||
Recoveries | 7.1 | 4.1 | 6.1 | 16.0 | 22.5 | |||||||||||||||||
Net Charge-offs | (23.4 | ) | (41.0 | ) | (61.3 | ) | (115.7 | ) | (105.7 | ) | ||||||||||||
Allowance — end of period | $ | 421.7 | $ | 399.4 | $ | 335.0 | $ | 421.7 | $ | 335.0 | ||||||||||||
Provision for credit losses | ||||||||||||||||||||||
Specific reserves on impaired loans | $ | 9.9 | $ | (0.5 | ) | $ | 9.5 | $ | 22.7 | $ | 17.6 | |||||||||||
Non-specific reserves | 36.3 | 28.6 | 40.4 | 150.9 | 85.3 | |||||||||||||||||
Total | $ | 46.2 | $ | 28.1 | $ | 49.9 | $ | 173.6 | $ | 102.9 | ||||||||||||
Allowance for loan losses | ||||||||||||||||||||||
Specific reserves on impaired loans | $ | 33.8 | $ | 29.4 | $ | 18.3 | ||||||||||||||||
Non-specific reserves | 387.9 | 370.0 | 316.7 | |||||||||||||||||||
Total | $ | 421.7 | $ | 399.4 | $ | 335.0 | ||||||||||||||||
Ratio | ||||||||||||||||||||||
Allowance for loan losses as a percentage of total loans | 1.41 | % | 1.31 | % | 1.03 | % | ||||||||||||||||
Allowance for loan losses as a percent of finance receivable/Commercial | 1.74 | % | 1.62 | % | 1.31 | % | ||||||||||||||||
Allowance for loan losses plus principal loss discount as a percent of finance receivables (before the principal loss discount)/Commercial | 1.93 | % | 1.83 | % | 1.78 | % | ||||||||||||||||
Allowance for loan losses plus principal loss discount as a percent of finance receivables (before the principal loss discount)/Consumer | 6.73 | % | 7.20 | % | 9.84 | % |
(1) | Includes amounts related to reserves on unfunded loan commitments and letters of credit, and for deferred purchase agreements, which are reflected in Other Liabilities, as well as foreign currency translation adjustments. |
(2) | Gross charge-offs included $8 million, $19 million and $40 million for the quarters ended September 30, 2016, December 31, 2015 and September 30, 2015, respectively, related to the transfer of receivables to AHFS. Gross charge-offs included $43 million and $54 million for the nine months ended September 30, 2016 and 2015, respectively, related to the transfer of receivables to AHFS. |
Loan Net Carrying Value(dollars in millions)
Finance Receivables | Allowance for Loan Losses | Net Carrying Value | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | ||||||||||||||
Commercial Banking | $ | 20,564.7 | $ | (342.5 | ) | $ | 20,222.2 | |||||||
Transportation Finance | 2,224.2 | (54.7 | ) | 2,169.5 | ||||||||||
Consumer and Community Banking | 7,129.3 | (24.5 | ) | 7,104.8 | ||||||||||
Total | $ | 29,918.2 | $ | (421.7 | ) | $ | 29,496.5 | |||||||
December 31, 2015 | ||||||||||||||
Commercial Banking | $ | 20,929.2 | $ | (310.5 | ) | $ | 20,618.7 | |||||||
Transportation Finance | 3,542.1 | (39.4 | ) | 3,502.7 | ||||||||||
Consumer and Community Banking | 7,200.4 | (10.3 | ) | 7,190.1 | ||||||||||
Total | $ | 31,671.7 | $ | (360.2 | ) | $ | 31,311.5 |
Net Charge-offs(dollars in millions)
Quarters Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||||||||||||||||||||||||||||||
Gross Charge-offs | |||||||||||||||||||||||||||||||||||||||||||
Aerospace | $ | 2.1 | 1.01 | % | $ | 6.6 | 2.66 | % | $ | – | – | $ | 28.0 | 3.23 | % | $ | 0.1 | 0.01 | % | ||||||||||||||||||||||||
Maritime | – | – | – | – | 0.1 | 0.03 | % | 0.3 | 0.03 | % | 0.7 | 0.07 | % | ||||||||||||||||||||||||||||||
Transportation Finance(1) | 2.1 | 0.33 | % | 6.6 | 0.97 | % | 0.1 | 0.01 | % | 28.3 | 1.30 | % | 0.8 | 0.03 | % | ||||||||||||||||||||||||||||
Commercial Finance | 9.2 | 0.44 | % | 18.8 | 0.84 | % | 5.7 | 0.26 | % | 44.1 | 0.66 | % | 33.7 | 0.61 | % | ||||||||||||||||||||||||||||
Real Estate Finance | – | – | 0.1 | 0.01 | % | – | – | 1.6 | 0.04 | % | – | – | |||||||||||||||||||||||||||||||
Business Capital | 18.5 | 1.10 | % | 19.1 | 1.16 | % | 17.1 | 1.04 | % | 55.8 | 1.12 | % | 41.5 | 0.84 | % | ||||||||||||||||||||||||||||
Commercial Banking(2) | 27.7 | 0.54 | % | 38.0 | 0.72 | % | 22.8 | 0.47 | % | 101.5 | 0.65 | % | 75.2 | 0.61 | % | ||||||||||||||||||||||||||||
Legacy Consumer Mortgages | 0.7 | 0.05 | % | 0.5 | 0.04 | % | 1.6 | 0.17 | % | 1.9 | 0.05 | % | 1.6 | 0.17 | % | ||||||||||||||||||||||||||||
Consumer and Community Banking | 0.7 | 0.04 | % | 0.5 | 0.03 | % | 1.6 | 0.14 | % | 1.9 | 0.04 | % | 1.6 | 0.13 | % | ||||||||||||||||||||||||||||
Non-Strategic Portfolios | – | – | – | – | 42.9 | 12.81 | % | – | – | 50.6 | 5.28 | % | |||||||||||||||||||||||||||||||
Total | $ | 30.5 | 0.40 | % | $ | 45.1 | 0.58 | % | $ | 67.4 | 0.94 | % | $ | 131.7 | 0.57 | % | $ | 128.2 | 0.76 | % | |||||||||||||||||||||||
Recoveries | |||||||||||||||||||||||||||||||||||||||||||
Aerospace | $ | – | – | $ | – | – | $ | – | – | $ | – | – | $ | 0.1 | 0.01 | % | |||||||||||||||||||||||||||
Transportation Finance(1) | – | – | – | – | – | – | – | – | 0.1 | – | |||||||||||||||||||||||||||||||||
Commercial Finance | 0.8 | 0.04 | % | 0.1 | 0.01 | % | 0.6 | 0.03 | % | 1.4 | 0.02 | % | 1.9 | 0.03 | % | ||||||||||||||||||||||||||||
Business Capital | 5.4 | 0.32 | % | 3.2 | 0.20 | % | 3.7 | 0.24 | % | 12.1 | 0.24 | % | 10.3 | 0.21 | % | ||||||||||||||||||||||||||||
Commercial Banking(2) | 6.2 | 0.12 | % | 3.3 | 0.06 | % | 4.3 | 0.09 | % | 13.5 | 0.09 | % | 12.2 | 0.10 | % | ||||||||||||||||||||||||||||
Legacy Consumer Mortgages | 0.8 | 0.06 | % | 0.8 | 0.07 | % | 0.5 | 0.05 | % | 2.4 | 0.07 | % | 0.5 | 0.05 | % | ||||||||||||||||||||||||||||
Consumer and Community Banking | 0.8 | 0.05 | % | 0.8 | 0.05 | % | 0.5 | 0.05 | % | 2.4 | 0.05 | % | 0.5 | 0.04 | % | ||||||||||||||||||||||||||||
Non-Strategic Portfolios | 0.1 | – | – | – | 1.3 | 0.38 | % | 0.1 | – | 9.7 | 1.01 | % | |||||||||||||||||||||||||||||||
Total | $ | 7.1 | 0.09 | % | $ | 4.1 | 0.05 | % | $ | 6.1 | 0.08 | % | $ | 16.0 | 0.07 | % | $ | 22.5 | 0.13 | % | |||||||||||||||||||||||
Net Charge-offs | |||||||||||||||||||||||||||||||||||||||||||
Aerospace | $ | 2.1 | 1.01 | % | $ | 6.6 | 2.66 | % | $ | – | – | $ | 28.0 | 3.23 | % | $ | – | – | |||||||||||||||||||||||||
Maritime | – | – | – | – | 0.1 | 0.03 | % | 0.3 | 0.03 | % | 0.7 | 0.07 | % | ||||||||||||||||||||||||||||||
Transportation Finance(1) | 2.1 | 0.33 | % | 6.6 | 0.97 | % | 0.1 | 0.01 | % | 28.3 | 1.30 | % | 0.7 | 0.03 | % | ||||||||||||||||||||||||||||
Commercial Finance | 8.4 | 0.40 | % | 18.7 | 0.83 | % | 5.1 | 0.23 | % | 42.7 | 0.64 | % | 31.8 | 0.58 | % | ||||||||||||||||||||||||||||
Real Estate Finance | – | – | 0.1 | 0.01 | % | – | – | 1.6 | 0.04 | % | – | – | |||||||||||||||||||||||||||||||
Business Capital | 13.1 | 0.78 | % | 15.9 | 0.96 | % | 13.4 | 0.80 | % | 43.7 | 0.88 | % | 31.2 | 0.63 | % | ||||||||||||||||||||||||||||
Commercial Banking(2) | 21.5 | 0.42 | % | 34.7 | 0.66 | % | 18.5 | 0.38 | % | 88.0 | 0.56 | % | 63.0 | 0.51 | % | ||||||||||||||||||||||||||||
Legacy Consumer Mortgages | (0.1 | ) | (0.01 | )% | (0.3 | ) | (0.03 | )% | 1.1 | 0.12 | % | (0.5 | ) | (0.02 | )% | 1.1 | 0.12 | % | |||||||||||||||||||||||||
Consumer and Community Banking | (0.1 | ) | (0.01 | )% | (0.3 | ) | (0.02 | )% | 1.1 | 0.09 | % | (0.5 | ) | (0.01 | )% | 1.1 | 0.09 | % | |||||||||||||||||||||||||
Non-Strategic Portfolios | (0.1 | ) | – | – | – | 41.6 | 12.43 | % | (0.1 | ) | – | 40.9 | 4.27 | % | |||||||||||||||||||||||||||||
Total | $ | 23.4 | 0.31 | % | $ | 41.0 | 0.53 | % | $ | 61.3 | 0.86 | % | $ | 115.7 | 0.50 | % | $ | 105.7 | 0.63 | % |
(1) | Transportation Finance charge-offs related to the transfer of receivables to assets held for sale for the quarters ended September 30, 2016 and June 30, 2016, totaled $2 million and $7 million, respectively. The year to date balances totaled $16 million and $1 million for the nine months ended September 30, 2016 and 2015, respectively. |
(2) | Commercial Banking charge-offs related to the transfer of receivables to assets held for sale for the quarters ended September 30, 2016, June 30, 2016, and September 30, 2015 totaled $6 million, $19 million, and $1 million, respectively. The year to date balances totaled $27 million and $13 million for the nine months ended September 30, 2016 and 2015, respectively. |
Non-accrual Loans(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Non-accrual loans | ||||||||||
U.S. | $ | 194.3 | $ | 185.3 | ||||||
Foreign | 94.2 | 82.4 | ||||||||
Non-accrual loans | $ | 288.5 | $ | 267.7 | ||||||
Troubled Debt Restructurings | ||||||||||
U.S. | $ | 57.6 | $ | 25.2 | ||||||
Foreign | 4.6 | 15.0 | ||||||||
Restructured loans | $ | 62.2 | $ | 40.2 | ||||||
Accruing loans past due 90 days or more | ||||||||||
Accruing loans past due 90 days or more | $ | 29.6 | $ | 15.8 |
September 30, 2016 | December 31, 2015 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Commercial Finance | $ | 131.1 | 1.59 | % | $ | 131.5 | 1.44 | % | ||||||||||
Real Estate Finance | 6.9 | 0.13 | % | 3.6 | 0.07 | % | ||||||||||||
Business Capital | 41.9 | 0.61 | % | 56.0 | 0.86 | % | ||||||||||||
Commercial Banking | 179.9 | 0.87 | % | 191.1 | 0.91 | % | ||||||||||||
Aerospace | 5.0 | 0.84 | % | 15.4 | 0.87 | % | ||||||||||||
Maritime | 49.4 | 3.22 | % | – | – | |||||||||||||
Transportation Finance | 54.4 | 2.45 | % | 15.4 | 0.43 | % | ||||||||||||
Other Consumer Banking | 0.3 | 0.02 | % | 0.4 | 0.02 | % | ||||||||||||
Legacy Consumer Mortgages | 13.9 | 0.28 | % | 4.8 | 0.09 | % | ||||||||||||
Consumer and Community Banking | 14.2 | 0.20 | % | 5.2 | 0.07 | % | ||||||||||||
Non-Strategic Portfolios | 40.0 | NM | 56.0 | NM | ||||||||||||||
Total | $ | 288.5 | 0.96 | % | $ | 267.7 | 0.85 | % |
Forgone Interest(dollars in millions)
Nine Months Ended September 30, | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2016 | 2015 | |||||||||||||||||||||||||
U.S. | Foreign | Total | U.S. | Foreign | Total | |||||||||||||||||||||
Interest revenue that would have been earned at original terms | $ | 20.3 | $ | 4.3 | $ | 24.6 | $ | 18.8 | $ | 7.1 | $ | 25.9 | ||||||||||||||
Less: Interest recorded | (3.4 | ) | (0.3 | ) | (3.7 | ) | (2.9 | ) | (2.0 | ) | (4.9 | ) | ||||||||||||||
Foregone interest revenue | $ | 16.9 | $ | 4.0 | $ | 20.9 | $ | 15.9 | $ | 5.1 | $ | 21.0 |
TDRs and Modifications(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
% Compliant | % Compliant | |||||||||||||||||
Troubled Debt Restructurings | ||||||||||||||||||
Deferral of principal and/or interest | $ | 9.0 | 97 | % | $ | 5.4 | 99 | % | ||||||||||
Interest only periods | 9.5 | 100 | % | – | – | |||||||||||||
Interest rate reductions | 8.7 | 100 | % | – | – | |||||||||||||
Covenant relief and other | 35.0 | 96 | % | 34.8 | 88 | % | ||||||||||||
Total TDRs | $ | 62.2 | 97 | % | $ | 40.2 | 90 | % | ||||||||||
Percent non-accrual | 87 | % | 63 | % | ||||||||||||||
Modifications(1) | ||||||||||||||||||
Extended maturity | $ | 91.6 | 100 | % | $ | 0.2 | 100 | % | ||||||||||
Covenant relief | 296.4 | 96 | % | 23.1 | 83 | % | ||||||||||||
Interest rate increase | 165.8 | 77 | % | 9.3 | 100 | % | ||||||||||||
Other | 197.5 | 99 | % | 218.4 | 100 | % | ||||||||||||
Total Modifications | $ | 751.3 | 93 | % | $ | 251.0 | 98 | % | ||||||||||
Percent non-accrual | 20 | % | 16 | % |
(1) | Table depicts the predominant element of each modification, which may contain several of the characteristics listed. |
NON-INTEREST INCOME
Non-interest Income(dollars in millions)
Quarters Ended | Nine Months Ended | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||||||
Rental income on operating leases | $ | 563.6 | $ | 569.3 | $ | 539.3 | $ | 1,708.3 | $ | 1,601.6 | ||||||||||||
Other Income: | ||||||||||||||||||||||
Fee revenues | 31.6 | 28.0 | 29.6 | 92.3 | 77.5 | |||||||||||||||||
Factoring commissions | 28.8 | �� | 24.1 | 30.9 | 79.3 | 87.4 | ||||||||||||||||
Gains on sales of leasing equipment | 22.4 | 28.0 | 30.7 | 61.6 | 84.2 | |||||||||||||||||
Gains on investments | 10.3 | 6.3 | 2.0 | 12.5 | 6.5 | |||||||||||||||||
Gains (losses) on OREO sales | 3.6 | 3.5 | (3.2 | ) | 8.8 | (3.2 | ) | |||||||||||||||
Gains (losses) on loan and portfolio sales | 3.4 | 7.7 | (14.7 | ) | 11.4 | (6.0 | ) | |||||||||||||||
Net (losses) gains on derivatives and foreign currency exchange | (15.7 | ) | 10.4 | (20.0 | ) | 4.0 | (34.7 | ) | ||||||||||||||
Impairment on assets held for sale | (22.0 | ) | (17.0 | ) | (23.6 | ) | (61.1 | ) | (44.7 | ) | ||||||||||||
Other revenues | 11.5 | 13.3 | 7.5 | 70.3 | 22.1 | |||||||||||||||||
Total other income | 73.9 | 104.3 | 39.2 | 279.1 | 189.1 | |||||||||||||||||
Total non-interest income | $ | 637.5 | $ | 673.6 | $ | 578.5 | $ | 1,987.4 | $ | 1,790.7 |
EXPENSES
Non-Interest Expense(dollars in millions)
Quarters Ended | Nine Months Ended | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||||||||||
Depreciation on operating lease equipment | $ | (179.1 | ) | $ | (176.4 | ) | $ | (159.1 | ) | $ | (530.8 | ) | $ | (473.7 | ) | ||||||||
Maintenance and other operating lease expenses | (60.4 | ) | (64.9 | ) | (55.9 | ) | (181.5 | ) | (151.4 | ) | |||||||||||||
Operating expenses: | |||||||||||||||||||||||
Compensation and benefits | (157.8 | ) | (155.9 | ) | (160.4 | ) | (485.9 | ) | (442.5 | ) | |||||||||||||
Professional fees | (47.2 | ) | (39.5 | ) | (57.3 | ) | (125.5 | ) | (97.6 | ) | |||||||||||||
Technology | (32.6 | ) | (31.3 | ) | (29.9 | ) | (94.3 | ) | (77.1 | ) | |||||||||||||
Net occupancy expense | (17.8 | ) | (17.4 | ) | (14.8 | ) | (53.6 | ) | (32.8 | ) | |||||||||||||
Advertising and marketing | (4.8 | ) | (4.4 | ) | (7.4 | ) | (14.6 | ) | (23.2 | ) | |||||||||||||
Other | (63.1 | ) | (72.9 | ) | (54.0 | ) | (192.6 | ) | (126.0 | ) | |||||||||||||
Operating expenses, excluding restructuring costs and intangible asset amortization | (323.3 | ) | (321.4 | ) | (323.8 | ) | (966.5 | ) | (799.2 | ) | |||||||||||||
Intangible assets amortization | (6.4 | ) | (6.4 | ) | (5.0 | ) | (19.2 | ) | (6.1 | ) | |||||||||||||
Provision for severance and facilities exiting activities | (2.3 | ) | (9.7 | ) | (5.1 | ) | (32.3 | ) | (5.2 | ) | |||||||||||||
Total operating expenses | (332.0 | ) | (337.5 | ) | (333.9 | ) | (1,018.0 | ) | (810.5 | ) | |||||||||||||
Loss on debt extinguishments and deposit redemptions | (5.1 | ) | (4.1 | ) | (0.3 | ) | (10.8 | ) | (0.4 | ) | |||||||||||||
Total non-interest expenses | $ | (576.6 | ) | $ | (582.9 | ) | $ | (549.2 | ) | $ | (1,741.1 | ) | $ | (1,436.0 | ) | ||||||||
Headcount | 4,650 | 4,650 | 4,960 | ||||||||||||||||||||
Operating expenses excluding restructuring costs and intangible asset amortization as a % of AEA(1) | (2.19 | )% | (2.17 | )% | (2.47 | )% | (2.18 | )% | (2.36 | )% | |||||||||||||
Net efficiency ratio(2) | 53.1 | % | 49.8 | % | 62.2 | % | 50.7 | % | 59.1 | % |
(1) | Operating expenses excluding restructuring costs and intangible asset amortization as a % of AEA is a non-GAAP measure; see “Non-GAAP Financial Measurements” for a reconciliation of non-GAAP to GAAP financial information. |
(2) | Net efficiency ratio is a non-GAAP measurement used by management to measure operating expenses (before restructuring costs and intangible amortization) to the level of total net revenues. See “Non-GAAP Financial Measurements” for a reconciliation of non-GAAP to GAAP financial information. |
essentially flat to the prior quarter. The prior quarter included $12 million of elevated OREO and FDIC expenses, $8 million of which related to OREO assets that occurred in prior periods. The absence of these items was partially offset by higher sales tax expense as we work through prior year audits in Commercial Banking. Operating expenses have been elevated due to costs related to OneWest Bank integration and other strategic initiatives including the Commercial Air sale, which are reflected in Professional Fees. The net efficiency ratio, while improved from the year-ago quarter, was up from the prior quarter reflecting lower net finance revenue and slightly higher operating expenses. Headcount at September 30, 2016 was flat with the prior quarter, and down from the year-ago quarter reflecting the strategic initiatives, such as portfolio exits.
n | Compensation and benefits decreased from the year-ago quarter, primarily reflecting the impact of fewer employees. Year to date, the increase reflects the inclusion of expenses associated with the added employees due to the OneWest Bank acquisition for the nine months in the current year compared to two months in the prior year. |
n | Professional fees include legal and other professional fees, such as tax, audit, and consulting services. The current and prior quarters include costs related to the integration of OneWest Bank and other strategic initiatives, including the separation of our Commercial Air business. Professional fees in the prior year were driven by OneWest Bank integration costs and costs related to exits of our non-strategic portfolios. Costs related to OneWest Bank integration and other strategic initiatives totaled $20 million for the quarter, $32 million for the year-ago quarter and $17 million for the prior quarter. |
n | Technology costs increased from the year-ago quarter reflecting OneWest Bank expense. |
n | Net Occupancy expenses were up from the year-ago quarter reflecting the added costs associated with OneWest Bank related to the branch network and office space. |
n | Advertising and marketing expenses include costs associated with raising deposits. |
n | Provision for severance and facilities exiting activities primarily reflects strategic initiatives to reduce operating expenses and streamline our operations, which resulted in employee reductions compared to the year-ago period. |
n | Amortization of intangible assets primarily results from intangible assets recorded in the OneWest Bank acquisition. |
n | Other expenses include items such as travel and entertainment, insurance, FDIC costs, office equipment and supplies costs and taxes other than income taxes. The sequential decrease reflects REO assets expenses that related to earlier periods. The increase from the year-ago quarter reflects OneWest Bank expenses for a full quarter. |
INCOME TAXES
Income Tax Data(dollars in millions)
Quarters Ended | Nine Months Ended | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||||||
Provision for income taxes, before discrete items | $ | 61.4 | $ | 90.4 | $ | 32.6 | $ | 215.6 | $ | 119.6 | ||||||||||||
Discrete items | 15.6 | 3.9 | (592.6 | ) | 8.4 | (597.8 | ) | |||||||||||||||
Provision (benefit) for income taxes | $ | 77.0 | 94.3 | $ | (560.0 | ) | $ | 224.0 | $ | (478.2 | ) | |||||||||||
Effective tax rate | 34.2 | % | 34.2 | % | (409.4 | )% | 31.8 | % | (109.3 | )% | ||||||||||||
Effective tax rate, before discrete items | 27.2 | % | 32.8 | % | 23.8 | % | 30.6 | % | 27.3 | % |
n | $16 million tax expense recorded this quarter related to the establishment of valuation allowances against certain international net deferred tax assets due to the exit of our international non-strategic portfolios, |
n | $14 million tax benefit, including interest and penalties, recorded in the first quarter resulting from favorable actions taken by the tax authorities related to uncertain tax positions taken on certain prior year non-U.S. tax returns, and |
n | $6 million miscellaneous other net tax expense items year to date. |
n | $647 million tax benefit recorded in the third quarter corresponding to a reduction to the U.S. federal deferred tax asset valuation allowance after considering the impact on earnings of the OneWest acquisition to support the Company’s ability to utilize the U.S. federal net operating losses, |
n | $29 million tax expense including interest and penalties recorded in the third quarter related to an uncertain tax position taken on certain prior year international tax returns, |
n | $28 million tax expense recorded in the third quarter related to establishment of domestic and international deferred tax liabilities as a result of Management’s decision to no longer assert its intent to indefinitely reinvest its unremitted earnings in China, and |
n | $9 million tax benefit recorded in the prior quarter corresponding to a reduction of certain tax reserves upon the receipt of a favorable tax ruling on an uncertain tax position taken on prior years’ tax returns. |
7 | Effective tax rate excluding discrete items is a non-GAAP measure. See “Non-GAAP Measurements” for reconciliation of non-GAAP financial information |
RESULTS BY BUSINESS SEGMENT
Commercial Banking: Financial Data and Metrics(dollars in millions)
Quarters Ended | Nine Months Ended | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Earnings Summary | September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||||||
Interest income | $ | 285.0 | $ | 289.2 | $ | 251.5 | $ | 861.3 | $ | 618.7 | |||||||||||||
Rental income on operating leases | 31.9 | 28.7 | 24.6 | 87.7 | 71.5 | ||||||||||||||||||
Finance revenue | 316.9 | 317.9 | 276.1 | 949.0 | 690.2 | ||||||||||||||||||
Interest expense | (76.2 | ) | (74.7 | ) | (67.3 | ) | (224.5 | ) | (196.8 | ) | |||||||||||||
Depreciation on operating lease equipment | (24.4 | ) | (21.5 | ) | (18.1 | ) | (65.9 | ) | (52.8 | ) | |||||||||||||
Net finance revenue (NFR) | 216.3 | 221.7 | 190.7 | 658.6 | 440.6 | ||||||||||||||||||
Provision for credit losses | (39.2 | ) | (11.4 | ) | (43.2 | ) | (124.1 | ) | (85.6 | ) | |||||||||||||
Other income | 65.9 | 60.9 | 70.7 | 182.3 | 201.6 | ||||||||||||||||||
Operating expenses | (161.2 | ) | (148.8 | ) | (146.5 | ) | (468.3 | ) | (410.5 | ) | |||||||||||||
Income before provision for income taxes | $ | 81.8 | $ | 122.4 | $ | 71.7 | $ | 248.5 | $ | 146.1 | |||||||||||||
Select Period End Balance | |||||||||||||||||||||||
Financing and leasing assets | $ | 21,245.0 | $ | 21,496.3 | $ | 22,274.8 | $ | 21,245.0 | $ | 22,274.8 | |||||||||||||
Earning assets | 21,454.0 | 21,740.5 | 22,818.2 | 21,454.0 | 22,818.2 |
Commercial Banking: Financial Data and Metrics(dollars in millions) (continued)
Quarters Ended | Nine Months Ended | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||||||||||
Select Average Balances | |||||||||||||||||||||||
Average finance receivables (AFR) | $ | 20,691.1 | $ | 21,040.7 | $ | 19,356.9 | $ | 20,930.4 | $ | 16,490.1 | |||||||||||||
Average earning assets (AEA)(1) | 20,385.1 | 20,575.1 | 18,724.0 | 20,526.5 | 15,846.5 | ||||||||||||||||||
Statistical Data | |||||||||||||||||||||||
Net efficiency ratio | 56.6 | % | 52.1 | % | 55.4 | % | 55.1 | % | 63.5 | % | |||||||||||||
Pretax return on AEA | 1.61 | % | 2.38 | % | 1.53 | % | 1.61 | % | 1.23 | % | |||||||||||||
New business volume | $ | 1,889.4 | $ | 2,048.4 | $ | 1,960.2 | $ | 5,519.2 | $ | 4,779.8 | |||||||||||||
Factoring volume | $ | 6,683.8 | $ | 5,529.3 | $ | 6,773.5 | $ | 18,086.9 | $ | 19,090.4 | |||||||||||||
Select Divisional Data | |||||||||||||||||||||||
Net finance revenue: | |||||||||||||||||||||||
Commercial Finance | $ | 88.5 | $ | 94.5 | $ | 79.9 | $ | 273.6 | $ | 169.0 | |||||||||||||
Real Estate Finance | 51.5 | 51.6 | 37.1 | 157.5 | 58.2 | ||||||||||||||||||
Business Capital | 76.3 | 75.6 | 73.7 | 227.5 | 213.4 | ||||||||||||||||||
Segment total | $ | 216.3 | $ | 221.7 | $ | 190.7 | $ | 658.6 | $ | 440.6 | |||||||||||||
Net finance margin — NFR as a % of AEA | |||||||||||||||||||||||
Commercial Finance | 4.00 | % | 4.08 | % | 3.59 | % | 3.96 | % | 3.01 | % | |||||||||||||
Real Estate Finance | 3.74 | % | 3.78 | % | 3.72 | % | 3.87 | % | 3.04 | % | |||||||||||||
Business Capital | 5.07 | % | 5.16 | % | 5.06 | % | 5.15 | % | 4.89 | % | |||||||||||||
Segment total | 4.24 | % | 4.31 | % | 4.07 | % | 4.28 | % | 3.71 | % |
(1) | AEA is lower than AFR as it is reduced by the average credit balances for factoring clients. |
n | The net finance revenue increased from the year-ago quarter, reflecting a full quarter of purchase accounting accretion on loans acquired from OneWest Bank. The decrease from the prior quarter was primarily due to an interest recovery on a loan previously charged off recognized last quarter. Purchase accounting accretion benefiting NFR totaled $37 million, $25 million and $38 million in the current, year-ago and prior quarters, respectively. Year to date 2016 benefited from $115 million of purchase accounting accretion. (Purchase accounting accretion is depicted in tabular form in theNet Finance Revenue section). The current and prior quarters included $17 million and $16 million, respectively, of PAA that was accelerated due to prepayments ($48 million year to date). Gross yields were up from both the year-ago and prior quarters due to a change in portfolio mix, with an increase in Business Capital volume. The increase compared to the year-ago quarter also reflects benefits of a full quarter of purchase accounting accretion from the OneWest Bank acquisition. SeeSelect Segment andDivision Margin Metrics table in Net Finance Revenue section for amounts of purchase accounting accretion and gross yields by division. |
n | Other income decreased from the year-ago quarter and increased from the prior quarter, reflecting the following: |
n | Factoring commissions of $29 million were down from the year-ago quarter reflecting mix and market conditions but up from the prior quarter due to seasonally higher factoring volume. |
n | Gains on asset sales (including receivables, equipment and investments) totaled $6 million, down from $13 million in the year-ago quarter and from $10 million in the prior quarter reflecting modest gains on sales of highly leveraged loans in the Commercial Finance division in the current quarter and the benefit of purchase accounting acceleration on loan sales in the prior quarter. Financing and Leasing assets sold totaled $220 million in the current quarter, compared to $131 million in the year-ago quarter and $224 million in the prior quarter. The sales activity in the current and prior quarter primarily reflected risk management actions to reduce certain highly leveraged loans in the Commercial Finance division. |
n | Fee revenue is mainly driven by fees on lines of credit and letters of credit, capital markets-related fees, agent and advisory fees, and servicing fees for the assets we sell but retain servicing. Fee revenue was $25 million in the current quarter, up from $24 million in the year-ago quarter and $22 million in the prior quarter, primarily driven by higher capital market fees in the Commercial Finance division. |
n | The provision for credit losses returned to a more normalized level, $39 million, in the current quarter, compared to a low of $11 million in the prior quarter, and $43 million in the year-ago quarter. The increase in provision from the prior quarter resulted from increases in the allowance for loan losses due to modest increases across divisions. Net charge-offs were $22 million (0.42% of average finance receivables), compared to $35 million (0.66%) in the prior quarter and $18 million (0.38%) in the year-ago quarter. Excluding assets transferred to held for sale in all periods, net charge-offs were $15 million in the current quarter, compared to $16 million in the prior quarter and $18 million in the year-ago quarter. Year to date, net charge-offs were $88 million (0.56%), $27 million of which related to assets transferred to held for sale, compared to charge offs of $63 million (0.51%), $13 million of which related to assets transferred to held for sale for the nine months ended September 2015. Non-accrual loans were $180 million (0.87% of finance receivables), compared to $208 million (1.00%) at June 30, 2016, and $147 million (0.67%) a year-ago. While the decrease from the prior quarter was related to a decline in non-accrual loans in the energy sector, non-accrual loans in this sector drove the increase from the year-ago quarter, partially offset by lower non-accrual balances in Business Capital. |
n | Operating expenses increased from the prior quarter and reflects higher sales and local taxes in Equipment Finance. The increase from the 2015 periods also reflects the impact of a full quarter and year to date amounts of OneWest Bank expenses. |
Transportation Finance: Financial Data and Metrics(dollars in millions)
Quarters Ended | Nine Months Ended | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Earnings Summary | September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||||||
Interest income | $ | 51.3 | $ | 49.9 | $ | 50.2 | $ | 153.9 | $ | 137.3 | |||||||||||||
Rental income on operating leases | 527.9 | 536.6 | 505.7 | 1,609.0 | 1,500.3 | ||||||||||||||||||
Finance revenue | 579.2 | 586.5 | 555.9 | 1,762.9 | 1,637.6 | ||||||||||||||||||
Interest expense | (146.7 | ) | (146.5 | ) | (139.7 | ) | (441.3 | ) | (439.0 | ) | |||||||||||||
Depreciation on operating lease equipment | (154.7 | ) | (154.9 | ) | (137.5 | ) | (464.9 | ) | (410.1 | ) | |||||||||||||
Maintenance and other operating lease expenses | (60.4 | ) | (64.9 | ) | (55.9 | ) | (181.5 | ) | (151.4 | ) | |||||||||||||
Net finance revenue (NFR) | 217.4 | 220.2 | 222.8 | 675.2 | 637.1 | ||||||||||||||||||
Provision for credit losses | (5.5 | ) | (15.6 | ) | 1.6 | (43.8 | ) | (5.9 | ) | ||||||||||||||
Other income | 6.5 | 11.7 | 23.0 | 37.0 | 72.2 | ||||||||||||||||||
Operating expenses | (61.8 | ) | (62.2 | ) | (53.6 | ) | (184.7 | ) | (184.6 | ) | |||||||||||||
Income before provision for income taxes | $ | 156.6 | $ | 154.1 | $ | 193.8 | $ | 483.7 | $ | 518.8 | |||||||||||||
Select Period End Balance | |||||||||||||||||||||||
Financing and leasing assets | $ | 19,915.0 | $ | 19,963.5 | $ | 18,735.1 | $ | 19,915.0 | $ | 18,735.1 | |||||||||||||
Earning assets | 20,950.4 | 20,960.2 | 19,261.8 | 20,950.4 | 19,261.8 | ||||||||||||||||||
Select Average Balances | |||||||||||||||||||||||
Average finance receivables (AFR) | $ | 2,526.6 | $ | 2,726.0 | $ | 3,246.0 | $ | 2,894.4 | $ | 3,080.6 | |||||||||||||
Average operating leases (AOL) | 16,581.3 | 16,477.3 | 14,977.9 | 16,476.7 | 14,785.3 | ||||||||||||||||||
Average earning assets (AEA) | 20,953.0 | 20,945.7 | 19,009.2 | 20,818.5 | 18,972.2 | ||||||||||||||||||
Statistical Data | |||||||||||||||||||||||
Net operating lease revenue — rental income, net of depreciation and maintenance and other operating lease expenses | $ | 312.8 | $ | 316.8 | $ | 312.3 | $ | 962.6 | $ | 938.8 | |||||||||||||
Operating lease margin as a % of AOL | 7.55 | % | 7.69 | % | 8.34 | % | 7.79 | % | 8.47 | % | |||||||||||||
Net efficiency ratio | 27.6 | % | 26.1 | % | 21.8 | % | 25.7 | % | 26.0 | % | |||||||||||||
Pretax return on AEA | 2.99 | % | 2.94 | % | 4.08 | % | 3.10 | % | 3.65 | % | |||||||||||||
New business volume | $ | 372.0 | $ | 461.0 | $ | 1,144.0 | $ | 1,078.9 | $ | 2,307.3 | |||||||||||||
Select Divisional Data | |||||||||||||||||||||||
Net finance revenue: | |||||||||||||||||||||||
Aerospace | $ | 124.8 | $ | 110.6 | $ | 111.2 | $ | 355.0 | $ | 311.9 | |||||||||||||
Rail | 77.5 | 94.0 | 98.7 | 271.7 | 293.0 | ||||||||||||||||||
Maritime Finance | 15.1 | 15.6 | 12.9 | 48.5 | 32.2 | ||||||||||||||||||
Segment total | $ | 217.4 | $ | 220.2 | $ | 222.8 | $ | 675.2 | $ | 637.1 | |||||||||||||
Net finance margin — NFR as a % of AEA | |||||||||||||||||||||||
Aerospace | 4.10 | % | 3.61 | % | 3.95 | % | 3.90 | % | 3.58 | % | |||||||||||||
Rail | 4.33 | % | 5.34 | % | 6.25 | % | 5.16 | % | 6.38 | % | |||||||||||||
Maritime Finance | 3.76 | % | 3.77 | % | 3.58 | % | 3.92 | % | 3.48 | % | |||||||||||||
Segment total | 4.15 | % | 4.21 | % | 4.69 | % | 4.32 | % | 4.48 | % |
order book deliveries, and down from the year-ago quarter, also reflecting limited maritime finance activity.
n | Net finance revenue was down slightly from the prior quarter, on lower rentals in rail. Net finance revenue decreased from the year-ago quarter, as higher average operating lease assets were partially offset by lower average yields, reflective of pressure on certain rental rates and utilization. Net finance margin was down from the prior and year-ago quarters reflecting the net finance revenue trends described above, and relatively stable funding costs. |
n | Gross yields in Aerospace were up slightly from the prior quarter to 11.04%, while gross yields in Rail of 12.38% were down primarily on lower renewal rates. Rail utilization remained at 94% compared to June 30, 2016, and down from 96% at December 31, 2015, reflecting pressures mostly from the crude, coal and steel industries. Demand for crude, coal and steel cars continues to be soft, therefore we still expect railcar utilization to move toward the low 90% range and rental rates to decline as leases re-new. About 41% of the total railcar order-book has lease commitments. SeeSelect Segment and Division Margin Metrics table inNet Finance Revenue section. |
n | Net operating lease revenue, which is a component of NFR, was flat with the year-ago quarter, as increased rental income from growth in the Aerospace and Rail divisions was offset by higher depreciation and maintenance and operating lease expenses. Compared to the prior quarter, net operating lease revenue was down slightly, on lower rents on the rail portfolio, reflective of lower renewal rates. The decline in the operating lease margin (as a percentage of average operating lease equipment) reflects these trends. |
n | Commercial aircraft utilization was 99%, with all but two aircraft on lease or under a commitment, down slightly from the prior quarter and year-end when all aircraft were on lease or under a commitment. All of our aircraft scheduled for delivery in the next 12 months have commitments. |
n | The current quarter new business volume included the delivery of one aircraft and approximately 2,000 railcars. The prior quarter new business volume included $457 million of operating lease equipment, including the delivery of six aircraft and approximately 1,700 railcars. |
n | Other income was down from the year-ago and prior quarters and primarily includes: |
n | Gains on asset sales totaled $20 million in 2016 on $100 million of asset sales, $22 million on $375 million of asset sales in the year-ago quarter, and $25 million of gains on $107 million of asset sales in the prior quarter. Year-to-date, gains on asset sales totaled $54 million in 2016 on $245 million of asset sales compared to $60 million on $858 million of equipment and receivable sales in 2015. |
n | Impairments on assets held for sale totaled $18 million in the current quarter, driven by business air assets in AHFS. Impairments were $1 million in the year-ago quarter and $18 million in the prior quarter, primarily driven by scrapping of railcars. Year-to-date, impairments on assets held for sale was approximately $38 million in 2016 and $4 million in 2015. |
n | Other income also includes a small amount of fee income, along with other revenue derived from loan commitments, joint ventures and other periodic items, such as a settlement from a bankrupt airline in the prior quarter. |
n | Non-accrual loans were $54 million (2.45% of finance receivables), compared to $18 million (0.70%) at June 30, 2016 and $15 million (0.43%) at December 31, 2015. The current quarter increase was due to the addition of a $49 million maritime finance account, while the other periods principally consisted of business aircraft loans. Net charge-offs were $2 million (0.33% of average finance receivables) in the current quarter, and primarily related to assets transferred to held for sale. Net charge-offs were $7 million (0.97%) in the prior quarter, primarily related to business air assets transferred to held for sale. Excluding assets |
transferred to held for sale, net charge-offs in the each of the quarters were less than $1 million. Year to date, net charge-offs were $28 million (1.30%), $16 million of which related to assets transferred to held for sale. The current and prior quarter provision for credit losses was driven by general reserve builds on the Maritime portfolio, while the prior quarter also included two Aerospace loan charge-offs. |
n | Operating expenses were relatively flat with the prior quarter as higher costs related to the commercial air separation offset lower employee costs. The current and prior quarter included $10 million and $9 million of costs related to the commercial air separation initiative, respectively. |
Consumer and Community Banking: Financial Data and Metrics(dollars in millions)
Quarters Ended | Nine Months Ended | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Earnings Summary | September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||||||||
Interest income | $ | 102.9 | $ | 105.4 | $ | 73.9 | $ | 311.5 | $ | 73.9 | ||||||||||||
Interest expense | (1.9 | ) | (5.9 | ) | (13.8 | ) | (16.7 | ) | (13.8 | ) | ||||||||||||
Net finance revenue (NFR) | 101.0 | 99.5 | 60.1 | 294.8 | 60.1 | |||||||||||||||||
Provision for credit losses | (1.6 | ) | (1.1 | ) | (5.1 | ) | (5.8 | ) | (5.1 | ) | ||||||||||||
Other income | 7.1 | 11.7 | 0.1 | 26.9 | 0.1 | |||||||||||||||||
Operating expenses | (87.7 | ) | (93.2 | ) | (59.0 | ) | (263.2 | ) | (59.0 | ) | ||||||||||||
Income (loss) before provision for income taxes | $ | 18.8 | $ | 16.9 | $ | (3.9 | ) | $ | 52.7 | $ | (3.9 | ) | ||||||||||
Select Period End Balance | ||||||||||||||||||||||
Financing and leasing assets | $ | 7,171.0 | $ | 7,171.8 | $ | 7,297.0 | $ | 7,171.0 | $ | 7,297.0 | ||||||||||||
Earning assets | 7,667.2 | 7,687.0 | 7,914.9 | 7,667.2 | 7,914.9 |
Consumer and Community Banking: Financial Data and Metrics(dollars in millions) (continued)
Quarters Ended | Nine Months Ended | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||||||||||
Select Average Balances | |||||||||||||||||||||||
Average finance receivables (AFR) | $ | 7,115.9 | $ | 7,155.6 | $ | 4,705.4 | $ | 7,140.9 | $ | 1,586.3 | |||||||||||||
Average earning assets (AEA) | 7,658.1 | 7,728.6 | 5,127.5 | 7,711.9 | 1,728.5 | ||||||||||||||||||
Statistical Data | |||||||||||||||||||||||
Net efficiency ratio | 76.8 | % | 79.6 | % | 92.7 | % | 77.5 | % | 92.7 | % | |||||||||||||
Pretax return on AEA | 0.98 | % | 0.87 | % | (0.30 | )% | 0.91 | % | (0.30 | )% | |||||||||||||
New business volume | $ | 289.0 | $ | 261.3 | $ | 29.6 | $ | 764.7 | $ | 29.6 | |||||||||||||
Select Divisional Data | |||||||||||||||||||||||
Net finance revenue: | |||||||||||||||||||||||
Other consumer banking | $ | 40.5 | $ | 37.1 | $ | 13.3 | $ | 111.6 | $ | 13.3 | |||||||||||||
LCM | 60.5 | 62.4 | 46.8 | 183.2 | 46.8 | ||||||||||||||||||
Segment total | $ | 101.0 | $ | 99.5 | $ | 60.1 | $ | 294.8 | $ | 60.1 | |||||||||||||
Net finance margin — NFR as a % of AEA | |||||||||||||||||||||||
Other consumer banking | 7.45 | % | 7.16 | % | 4.56 | % | 7.22 | % | 4.49 | % | |||||||||||||
LCM | 4.41 | % | 4.41 | % | 4.73 | % | 4.32 | % | 4.68 | % | |||||||||||||
Segment total | 5.28 | % | 5.15 | % | 4.69 | % | 5.10 | % | 4.64 | % |
n | NFR was up slightly from the prior quarter. NFR also benefits from purchase accounting accretion. There was $29 million and $35 million of purchase accounting accretion in the current and prior quarters, compared to $24 million in the prior-year quarter. |
n | Other income included gains on REO properties, fee revenue and other miscellaneous income. Gains on OREO properties totaled approximately $4 million each in the current and prior quarter, compared to a loss of $3 million in the prior-year quarter. While fee revenue was fairly consistent across the quarters at approximately $3 million each, other revenue was down in the current quarter reflecting a fair value adjustment loss of approximately $1 million for the FDIC Receivable measured at fair value. |
n | Non-accrual loans were $14 million (0.20% of finance receivables) at September 30, 2016, up from $12 million (0.16%) at June 30, 2016, and $5 million (0.07%) at December 31, 2015. The increase from the prior year is due to slight deterioration in the LCM portfolio. |
n | Operating expenses are reflective of the inclusion of branch operation costs, which also causes the net efficiency ratio to be higher than other segments. The decline from the prior quarter is due to decreased REO expenses. |
Non-Strategic Portfolios: Financial Data and Metrics(dollars in millions)
Quarters Ended | Nine Months Ended | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Earnings Summary | September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||||||
Interest income | $ | 22.6 | $ | 23.2 | $ | 43.7 | $ | 70.8 | $ | 145.3 | |||||||||||||
Rental income on operating leases | 3.8 | 4.0 | 9.0 | 11.6 | 29.8 | ||||||||||||||||||
Finance revenue | 26.4 | 27.2 | 52.7 | 82.4 | 175.1 | ||||||||||||||||||
Interest expense | (12.7 | ) | (13.7 | ) | (27.3 | ) | (40.9 | ) | (99.3 | ) | |||||||||||||
Depreciation on operating lease equipment | – | – | (3.5 | ) | – | (10.8 | ) | ||||||||||||||||
Net finance revenue (NFR) | 13.7 | 13.5 | 21.9 | 41.5 | 65.0 | ||||||||||||||||||
Provision for credit losses | 0.1 | – | (3.2 | ) | 0.1 | (6.3 | ) | ||||||||||||||||
Other income | 4.9 | 6.7 | (35.4 | ) | 26.1 | (42.6 | ) | ||||||||||||||||
Operating expenses | (11.0 | ) | (12.1 | ) | (26.0 | ) | (35.2 | ) | (97.6 | ) | |||||||||||||
Income (loss) before provision for income taxes | $ | 7.7 | $ | 8.1 | $ | (42.7 | ) | $ | 32.5 | $ | (81.5 | ) | |||||||||||
Select Period End Balance | |||||||||||||||||||||||
Financing and leasing assets | $ | 1,004.1 | $ | 1,093.1 | $ | 1,791.8 | $ | 1,004.1 | $ | 1,791.8 | |||||||||||||
Earning assets | 1,195.9 | 1,341.4 | 2,062.1 | 1,195.9 | 2,062.1 | ||||||||||||||||||
Select Average Balances | |||||||||||||||||||||||
Average finance receivables (AFR) | $ | – | $ | – | $ | 1,339.1 | $ | – | $ | 1,276.6 | |||||||||||||
Average earning assets (AEA) | 1,283.8 | 1,384.5 | 2,284.3 | 1,398.7 | 2,514.6 | ||||||||||||||||||
Statistical Data | |||||||||||||||||||||||
Net finance margin — NFR as a % of AEA | 4.27 | % | 3.90 | % | 3.83 | % | 3.96 | % | 3.45 | % | |||||||||||||
Pretax return on AEA | 2.40 | % | 2.34 | % | (7.48 | )% | 3.10 | % | (4.32 | )% | |||||||||||||
New business volume | $ | 45.7 | $ | 61.1 | $ | 184.4 | $ | 151.1 | $ | 601.3 |
n | Net finance revenue (“NFR”) was up slightly compared to the prior quarter, but down from the year-ago quarter on lower earning assets. |
n | Other income for the current and prior quarters primarily reflects miscellaneous items, such as recoveries of amounts previously charged off, while the 2016 year to date includes a gain of $24 million from the sale of the U.K. business for the quarter ended March 31, 2016. The prior-year periods included loss on asset sales, CTA losses, mostly related to the sale of the Mexico business, and impairment charges on AHFS. |
n | Operating expenses were down, primarily reflecting lower cost due to sales of businesses and run-off of assets. |
Corporate and Other: Financial Data and Metrics(dollars in millions)
Quarters Ended | Nine Months Ended | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Earnings Summary | September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||||||
Interest income | $ | 28.3 | $ | 27.6 | $ | 18.4 | $ | 83.3 | $ | 27.3 | |||||||||||||
Interest expense | (41.9 | ) | (41.7 | ) | (32.2 | ) | (124.9 | ) | (67.9 | ) | |||||||||||||
Net finance revenue (NFR) | (13.6 | ) | (14.1 | ) | (13.8 | ) | (41.6 | ) | (40.6 | ) | |||||||||||||
Other income | (10.5 | ) | 13.3 | (19.2 | ) | 6.8 | (42.2 | ) | |||||||||||||||
Operating expenses | (15.4 | ) | (25.3 | ) | (49.1 | ) | (77.4 | ) | (59.2 | ) | |||||||||||||
Loss before provision for income taxes | $ | (39.5 | ) | $ | (26.1 | ) | $ | (82.1 | ) | $ | (112.2 | ) | $ | (142.0 | ) | ||||||||
Select Average Balances | |||||||||||||||||||||||
Average earning assets (AEA) | $ | 8,725.4 | $ | 8,595.3 | $ | 7,303.1 | $ | 8,662.6 | $ | 6,081.1 | |||||||||||||
Statistical Data | |||||||||||||||||||||||
Pretax return on AEA | (1.81 | )% | (1.21 | )% | (4.50 | )% | (1.73 | )% | (3.11 | )% |
n | Interest income consists of interest and dividend income, primarily from investment securities and deposits held at other depository institutions. The increase from the year-ago periods reflects additional income from the OneWest Bank acquisition and the associated investment portfolio. |
n | Interest expense is allocated to the segments. Interest expense held in Corporate represents amounts in excess of these allocations and amounts related to excess liquidity. |
n | Other income primarily reflects gains and (losses) on derivatives, including the TRS, fair value adjustment on certain MBS securities carried at fair value, and foreign currency exchange. The TRS had a mark-to-market charge of $20 million in the current quarter, compared to a mark-to-market charge of $24 million in the year-ago quarter and a mark-to-market benefit of $9 million in the prior quarter. Other income in the current quarter also includes a gain of $10 million from the MBS securities portfolio carried at fair value, compared to a $5 million gain in the prior quarter. The 2015 year to date period also included $9 million related to the write-off of other receivables that was fully offset with a benefit to the tax provision. |
n | Operating expenses reflects salary and general and administrative expenses in excess of amounts allocated to the business segments. Operating expenses were down in the current quarter compared to the year-ago quarter, which included costs associated with the OneWest Bank acquisition. Compared to the prior quarter, operating expenses were down from the prior quarter mostly driven by lower provision for severance and facilities exiting activities, which was $2 million during the current quarter, compared to $5 million in the year-ago quarter and $10 million in the prior quarter. |
FINANCING AND LEASING ASSETS
Financing and Leasing Asset Composition(dollars in millions)
September 30, 2016 | June 30, 2016 | December 31, 2015 | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Commercial Banking | |||||||||||||||
Loans | $ | 20,564.7 | $ | 20,709.8 | $ | 20,929.2 | |||||||||
Operating lease equipment, net | 348.6 | 314.8 | 259.0 | ||||||||||||
Assets held for sale | 331.7 | 471.7 | 414.9 | ||||||||||||
Financing and leasing assets | 21,245.0 | 21,496.3 | 21,603.1 | ||||||||||||
Commercial Finance | |||||||||||||||
Loans | 8,257.2 | 8,512.9 | 9,118.6 | ||||||||||||
Assets held for sale | 322.8 | 461.3 | 313.6 | ||||||||||||
Financing and leasing assets | 8,580.0 | 8,974.2 | 9,432.2 | ||||||||||||
Real Estate Finance | |||||||||||||||
Loans | 5,413.9 | 5,566.1 | 5,300.6 | ||||||||||||
Assets held for sale | – | – | 57.0 | ||||||||||||
Financing and leasing assets | 5,413.9 | 5,566.1 | 5,357.6 | ||||||||||||
Business Capital | |||||||||||||||
Loans | 6,893.6 | 6,630.8 | 6,510.0 | ||||||||||||
Operating lease equipment, net | 348.6 | 314.8 | 259.0 | ||||||||||||
Assets held for sale | 8.9 | 10.4 | 44.3 | ||||||||||||
Financing and leasing assets | 7,251.1 | 6,956.0 | 6,813.3 | ||||||||||||
Transportation Finance | |||||||||||||||
Loans | 2,224.2 | 2,613.1 | 3,542.1 | ||||||||||||
Operating lease equipment, net | 16,606.2 | 16,549.8 | 16,358.0 | ||||||||||||
Assets held for sale | 1,084.6 | 800.6 | 54.9 | ||||||||||||
Financing and leasing assets | 19,915.0 | 19,963.5 | 19,955.0 | ||||||||||||
Aerospace | |||||||||||||||
Loans | 585.3 | 904.4 | 1,762.3 | ||||||||||||
Operating lease equipment, net | 9,571.7 | 9,685.6 | 9,765.2 | ||||||||||||
Assets held for sale | 1,055.4 | 764.1 | 34.7 | ||||||||||||
Financing and leasing assets | 11,212.4 | 11,354.1 | 11,562.2 | ||||||||||||
Rail | |||||||||||||||
Loans | 106.3 | 106.9 | 120.9 | ||||||||||||
Operating lease equipment, net | 7,034.5 | 6,864.2 | 6,592.8 | ||||||||||||
Assets held for sale | 0.4 | 6.9 | 0.7 | ||||||||||||
Financing and leasing assets | 7,141.2 | 6,978.0 | 6,714.4 | ||||||||||||
Maritime Finance | |||||||||||||||
Loans | 1,532.6 | 1,601.8 | 1,658.9 | ||||||||||||
Assets held for sale | 28.8 | 29.6 | 19.5 | ||||||||||||
Financing and leasing assets | 1,561.4 | 1,631.4 | 1,678.4 | ||||||||||||
Consumer and Community Banking | |||||||||||||||
Loans | 7,129.3 | 7,133.9 | 7,200.4 | ||||||||||||
Assets held for sale | 41.7 | 37.9 | 45.1 | ||||||||||||
Financing and leasing assets | 7,171.0 | 7,171.8 | 7,245.5 | ||||||||||||
Other Consumer Banking | |||||||||||||||
Loans | 2,121.3 | 1,977.1 | 1,770.0 | ||||||||||||
Assets held for sale | 8.9 | 3.3 | 3.9 | ||||||||||||
Financing and leasing assets | 2,130.2 | 1,980.4 | 1,773.9 | ||||||||||||
Legacy Consumer Mortgages | |||||||||||||||
Loans | 5,008.0 | 5,156.8 | 5,430.4 | ||||||||||||
Assets held for sale | 32.8 | 34.6 | 41.2 | ||||||||||||
Financing and leasing assets | 5,040.8 | 5,191.4 | 5,471.6 | ||||||||||||
Non-Strategic Portfolios | |||||||||||||||
Loans | – | – | – | ||||||||||||
Operating lease equipment, net | – | – | – | ||||||||||||
Assets held for sale | 1,004.1 | 1,093.1 | 1,577.5 | ||||||||||||
Financing and leasing assets | 1,004.1 | 1,093.1 | 1,577.5 | ||||||||||||
Total financing and leasing assets | $ | 49,335.1 | $ | 49,724.7 | $ | 50,381.1 |
Financing and Leasing Assets Rollforward(dollars in millions)
Commercial Banking | Transportation Finance | Consumer and Community Banking | Non- Strategic Portfolios | Total | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at June 30, 2016 | $ | 21,496.3 | $ | 19,963.5 | $ | 7,171.8 | $ | 1,093.1 | $ | 49,724.7 | ||||||||||||
New business volume | 1,889.4 | 372.0 | 289.0 | 45.7 | 2,596.1 | |||||||||||||||||
Loan and portfolio sales | (173.3 | ) | (18.1 | ) | (28.6 | ) | – | (220.0 | ) | |||||||||||||
Equipment sales | (46.8 | ) | (81.9 | ) | – | (23.5 | ) | (152.2 | ) | |||||||||||||
Depreciation | (24.4 | ) | (154.7 | ) | – | – | (179.1 | ) | ||||||||||||||
Gross charge-offs | (27.7 | ) | (2.1 | ) | (0.7 | ) | – | (30.5 | ) | |||||||||||||
Collections and other | (1,868.5 | ) | (163.7 | ) | (260.5 | ) | (111.2 | ) | (2,403.9 | ) | ||||||||||||
Balance at September 30, 2016 | $ | 21,245.0 | $ | 19,915.0 | $ | 7,171.0 | $ | 1,004.1 | $ | 49,335.1 | ||||||||||||
Balance at December 31, 2015 | $ | 21,603.1 | $ | 19,955.0 | $ | 7,245.5 | $ | 1,577.5 | $ | 50,381.1 | ||||||||||||
New business volume | 5,519.2 | 1,078.9 | 764.7 | 151.1 | 7,513.9 | |||||||||||||||||
Portfolio / business purchases | – | 64.1 | – | – | 64.1 | |||||||||||||||||
Loan and portfolio sales | (443.6 | ) | (18.1 | ) | (71.7 | ) | (20.1 | ) | (553.5 | ) | ||||||||||||
Equipment sales | (130.2 | ) | (227.1 | ) | – | (46.4 | ) | (403.7 | ) | |||||||||||||
Depreciation | (65.9 | ) | (464.9 | ) | – | – | (530.8 | ) | ||||||||||||||
Gross charge-offs | (101.5 | ) | (28.3 | ) | (1.9 | ) | – | (131.7 | ) | |||||||||||||
Collections and other | (5,136.1 | ) | (444.6 | ) | (765.6 | ) | (658.0 | ) | (7,004.3 | ) | ||||||||||||
Balance at September 30, 2016 | $ | 21,245.0 | $ | 19,915.0 | $ | 7,171.0 | $ | 1,004.1 | $ | 49,335.1 |
New Business Volume(dollars in millions)
Quarters Ended | Nine Months Ended | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||||||
Commercial Banking | $ | 1,889.4 | $ | 2,048.4 | $ | 1,960.2 | $ | 5,519.2 | $ | 4,779.8 | ||||||||||||
Transportation Finance | 372.0 | 461.0 | 1,144.0 | 1,078.9 | 2,307.3 | |||||||||||||||||
Consumer and Community Banking | 289.0 | 261.3 | 29.6 | 764.7 | 29.6 | |||||||||||||||||
Non-Strategic Portfolios | 45.7 | 61.1 | 184.4 | 151.1 | 601.3 | |||||||||||||||||
Total | $ | 2,596.1 | $ | 2,831.8 | $ | 3,318.2 | $ | 7,513.9 | $ | 7,718.0 |
Loan and Portfolio Sales(dollars in millions)
Quarters Ended | Nine Months Ended | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||||||
Commercial Banking | $ | 173.3 | $ | 186.9 | $ | 90.1 | $ | 443.6 | $ | 182.8 | ||||||||||||
Transportation Finance | 18.1 | – | 42.2 | 18.1 | 65.6 | |||||||||||||||||
Consumer and Community Banking | 28.6 | 32.6 | 3.4 | 71.7 | 3.4 | |||||||||||||||||
Non-Strategic Portfolios | – | – | 185.3 | 20.1 | 200.2 | |||||||||||||||||
Total | $ | 220.0 | $ | 219.5 | $ | 321.0 | $ | 553.5 | $ | 452.0 |
Equipment Sales(dollars in millions)
Quarters Ended | Nine Months Ended | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||||||
Commercial Banking | $ | 46.8 | $ | 37.1 | $ | 41.2 | $ | 130.2 | $ | 116.2 | ||||||||||||
Transportation Finance | 81.9 | 106.8 | 332.8 | 227.1 | 791.9 | |||||||||||||||||
Non-Strategic Portfolios | 23.5 | 12.4 | 24.6 | 46.4 | 82.6 | |||||||||||||||||
Total | $ | 152.2 | $ | 156.3 | $ | 398.6 | $ | 403.7 | $ | 990.7 |
CONCENTRATIONS
Total Financing and Leasing Assets by Geographic Region(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
West | $ | 12,174.2 | 24.7 | % | $ | 12,208.3 | 24.2 | % | ||||||||||
Northeast | 9,601.6 | 19.5 | % | 9,383.2 | 18.6 | % | ||||||||||||
Southwest | 4,702.2 | 9.5 | % | 4,785.5 | 9.5 | % | ||||||||||||
Southeast | 4,450.5 | 9.0 | % | 4,672.3 | 9.3 | % | ||||||||||||
Midwest | 4,389.6 | 8.9 | % | 4,446.3 | 8.8 | % | ||||||||||||
Total U.S. | 35,318.1 | 71.6 | % | 35,495.6 | 70.4 | % | ||||||||||||
Asia / Pacific | 4,931.0 | 10.0 | % | 5,312.0 | 10.6 | % | ||||||||||||
Europe | 2,917.6 | 5.9 | % | 3,283.3 | 6.5 | % | ||||||||||||
Canada | 2,493.5 | 5.1 | % | 2,612.6 | 5.2 | % | ||||||||||||
Latin America | 1,356.1 | 2.7 | % | 1,508.3 | 3.0 | % | ||||||||||||
All other countries | 2,318.8 | 4.7 | % | 2,169.3 | 4.3 | % | ||||||||||||
Total | $ | 49,335.1 | 100.0 | % | $ | 50,381.1 | 100.0 | % |
COMMERCIAL CONCENTRATIONS
Commercial Financing and Leasing Assets by Obligor — Geographic Region(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Northeast | $ | 8,461.1 | 19.9 | % | $ | 8,169.4 | 18.8 | % | ||||||||||
West | 7,373.9 | 17.3 | % | 7,454.2 | 17.1 | % | ||||||||||||
Southwest | 4,604.4 | 10.8 | % | 4,669.1 | 10.7 | % | ||||||||||||
Midwest | 4,167.7 | 9.8 | % | 4,193.5 | 9.7 | % | ||||||||||||
Southeast | 3,926.6 | 9.2 | % | 4,117.4 | 9.5 | % | ||||||||||||
Total U.S. | 28,533.7 | 67.0 | % | 28,603.6 | 65.8 | % | ||||||||||||
Asia / Pacific | 4,931.0 | 11.6 | % | 5,311.2 | 12.2 | % | ||||||||||||
Europe | 2,917.6 | 6.9 | % | 3,278.5 | 7.5 | % | ||||||||||||
Canada | 2,493.5 | 5.9 | % | 2,604.3 | 6.0 | % | ||||||||||||
Latin America | 1,356.1 | 3.2 | % | 1,507.9 | 3.5 | % | ||||||||||||
All other countries | 2,318.8 | 5.4 | % | 2,167.1 | 5.0 | % | ||||||||||||
Total | $ | 42,550.7 | 100.0 | % | $ | 43,472.6 | 100.0 | % |
Commercial Financing and Leasing Assets by Obligor — State and Country(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
State | ||||||||||||||||||
California | $ | 5,378.1 | 12.6 | % | $ | 5,309.2 | 12.2 | % | ||||||||||
Texas | 3,866.0 | 9.1 | % | 3,989.9 | 9.2 | % | ||||||||||||
New York | 2,969.5 | 7.0 | % | 2,870.7 | 6.6 | % | ||||||||||||
All other states | 16,320.1 | 38.3 | % | 16,433.8 | 37.8 | % | ||||||||||||
Total U.S. | $ | 28,533.7 | 67.0 | % | $ | 28,603.6 | 65.8 | % | ||||||||||
Country | ||||||||||||||||||
Canada | $ | 2,493.5 | 5.9 | % | $ | 2,604.3 | 6.0 | % | ||||||||||
China | 963.5 | 2.3 | % | 982.6 | 2.3 | % | ||||||||||||
Australia | 761.2 | 1.8 | % | 842.9 | 1.9 | % | ||||||||||||
Mexico | 649.1 | 1.5 | % | 676.0 | 1.6 | % | ||||||||||||
Marshall Islands | 645.0 | 1.5 | % | 882.0 | 2.0 | % | ||||||||||||
Spain | 547.7 | 1.3 | % | 560.1 | 1.3 | % | ||||||||||||
U.K. | 501.0 | 1.2 | % | 949.8 | 2.2 | % | ||||||||||||
Philippines | 470.7 | 1.1 | % | 485.7 | 1.1 | % | ||||||||||||
All other countries | 6,985.3 | 16.4 | % | 6,885.6 | 15.8 | % | ||||||||||||
Total International | $ | 14,017.0 | 33.0 | % | $ | 14,869.0 | 34.2 | % |
Commercial Financing and Leasing Assets by Obligor — Industry(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Commercial airlines (including regional airlines)(1) | $ | 10,627.4 | 25.0 | % | $ | 10,728.3 | 24.7 | % | ||||||||||
Real Estate | 4,963.6 | 11.7 | % | 4,895.4 | 11.3 | % | ||||||||||||
Transportation(3) | 4,730.7 | 11.1 | % | 4,586.5 | 10.5 | % | ||||||||||||
Manufacturing(2) | 4,653.8 | 10.9 | % | 4,951.3 | 11.4 | % | ||||||||||||
Service industries | 3,250.5 | 7.6 | % | 3,441.2 | 7.9 | % | ||||||||||||
Retail(4) | 2,507.3 | 5.9 | % | 2,513.4 | 5.8 | % | ||||||||||||
Energy and utilities | 2,442.7 | 5.7 | % | 2,091.5 | 4.8 | % | ||||||||||||
Wholesale | 2,134.8 | 5.0 | % | 2,310.5 | 5.3 | % | ||||||||||||
Oil and gas extraction / services | 1,621.1 | 3.8 | % | 1,871.0 | 4.3 | % | ||||||||||||
Healthcare | 1,391.9 | 3.3 | % | 1,223.4 | 2.8 | % | ||||||||||||
Finance and insurance | 1,005.3 | 2.4 | % | 1,128.2 | 2.6 | % | ||||||||||||
Other (no industry greater than 2%) | 3,221.6 | 7.6 | % | 3,731.9 | 8.6 | % | ||||||||||||
Total | $ | 42,550.7 | 100.0 | % | $ | 43,472.6 | 100.0 | % |
(1) | Includes the Commercial Air Portfolio and additional financing and leasing assets that are not commercial aircraft. |
(2) | At September 30, 2016, manufacturers of chemicals, including pharmaceuticals (2.7%), petroleum and coal, including refining (1.7%), food (1.2%), and stone, clay, glass and concrete (1.0%). |
(3) | At September 30, 2016, includes rail (4.7%), maritime (4.1%) and trucking and shipping (1.3%). |
(4) | At September 30, 2016 includes retailers of general merchandise (2.2%). |
Commercial Air Portfolio(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net Investment | Number | Net Investment | Number | |||||||||||||||
By Product: | ||||||||||||||||||
Operating lease(1) | $ | 9,611.5 | 283 | $ | 9,772.2 | 284 | ||||||||||||
Loan | 607.9 | 44 | 664.5 | 57 | ||||||||||||||
Capital lease | 403.3 | 22 | 320.4 | 21 | ||||||||||||||
Total | $ | 10,622.7 | 349 | $ | 10,757.1 | 362 |
Commercial Air Operating Lease Portfolio(dollars in millions)(1)
September 30, 2016 | December 31, 2015 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net Investment | Number | Net Investment | Number | |||||||||||||||
By Region: | ||||||||||||||||||
Asia / Pacific | $ | 3,844.5 | 94 | $ | 3,704.2 | 88 | ||||||||||||
U.S. and Canada | 2,044.9 | 64 | 2,091.0 | 65 | ||||||||||||||
Europe | 2,044.3 | 76 | 2,195.4 | 80 | ||||||||||||||
Latin America | 1,055.9 | 35 | 1,152.6 | 38 | ||||||||||||||
Africa / Middle East | 621.9 | 14 | 629.0 | 13 | ||||||||||||||
Total | $ | 9,611.5 | 283 | $ | 9,772.2 | 284 | ||||||||||||
By Manufacturer: | ||||||||||||||||||
Airbus | $ | 6,105.0 | 159 | $ | 6,232.3 | 161 | ||||||||||||
Boeing | 2,927.0 | 102 | 2,929.6 | 101 | ||||||||||||||
Embraer | 532.0 | 21 | 552.7 | 21 | ||||||||||||||
Other | 47.5 | 1 | 57.6 | 1 | ||||||||||||||
Total | $ | 9,611.5 | 283 | $ | 9,772.2 | 284 | ||||||||||||
By Body Type(2): | ||||||||||||||||||
Narrow body | $ | 6,167.5 | 230 | $ | 6,211.4 | 230 | ||||||||||||
Intermediate | 3,395.6 | 51 | 3,502.2 | 52 | ||||||||||||||
Regional and other | 48.4 | 2 | 58.6 | 2 | ||||||||||||||
Total | $ | 9,611.5 | 283 | $ | 9,772.2 | 284 | ||||||||||||
Number of customers | 99 | 95 | ||||||||||||||||
Weighted average age of fleet (years) | 6 | 5 |
(1) | Includes operating lease equipment held for sale. |
(2) | Narrow body are single aisle design and consist primarily of Boeing 737 and 757 series and Airbus A320 series aircraft. Intermediate body are smaller twin aisle design and consist primarily of Boeing 767 series and Airbus A330 series aircraft. Regional and other include engines and Bombardier CRJ-900. |
CONSUMER CONCENTRATIONS
Consumer Financing and Leasing Assets(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net Investment | % of Total | Net Investment | % of Total | |||||||||||||||
Single family residential | $ | 5,626.9 | 82.9 | % | $ | 5,657.6 | 81.9 | % | ||||||||||
Reverse mortgage | 901.6 | 13.3 | % | 917.4 | 13.3 | % | ||||||||||||
Home Equity Lines of Credit | 254.2 | 3.8 | % | 325.7 | 4.7 | % | ||||||||||||
Other consumer | 1.7 | 0.0 | % | 7.8 | 0.1 | % | ||||||||||||
Total loans | $ | 6,784.4 | 100.0 | % | $ | 6,908.5 | 100.0 | % |
Consumer Financing and Leasing Assets Geographic Concentrations(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net Investment | % of Total | Net Investment | % of Total | |||||||||||||||
California | $ | 4,309.0 | 63.5 | % | $ | 4,236.5 | 61.3 | % | ||||||||||
New York | 534.4 | 7.9 | % | 560.5 | 8.1 | % | ||||||||||||
Florida | 291.7 | 4.3 | % | 306.7 | 4.5 | % | ||||||||||||
New Jersey | 161.6 | 2.4 | % | 177.8 | 2.6 | % | ||||||||||||
Maryland | 139.0 | 2.0 | % | 154.4 | 2.2 | % | ||||||||||||
Other States and Territories(1) | 1,348.7 | 19.9 | % | 1,472.6 | 21.3 | % | ||||||||||||
$ | 6,784.4 | 100.0 | % | $ | 6,908.5 | 100.0 | % |
(1) | No state or territory has a total in excess of 2%. |
OTHER ASSETS AND OTHER LIABILITIES
Other Assets(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Current and deferred federal and state tax assets | $ | 1,087.2 | $ | 1,252.5 | ||||||
Deposits on commercial aerospace equipment | 934.1 | 696.0 | ||||||||
Tax credit investments and investments in unconsolidated subsidiaries | 242.9 | 223.9 | ||||||||
Property, furniture and fixtures | 186.1 | 197.2 | ||||||||
Other counterparty receivables | 139.9 | 59.0 | ||||||||
Fair value of derivative financial instruments | 124.1 | 140.7 | ||||||||
OREO and repossessed assets | 88.7 | 127.3 | ||||||||
Tax receivables, other than income taxes | 71.0 | 98.2 | ||||||||
Other(1),(2) | 445.0 | 502.8 | ||||||||
Total other assets | $ | 3,319.0 | $ | 3,297.6 |
(1) | Other includes executive retirement plan and deferred compensation, prepaid expenses, accrued interest and dividends and other miscellaneous assets. |
(2) | Other also includes servicing advances. In connection with the OneWest Transaction, the Company acquired the servicing obligations for residential mortgage loans. As of September 30, 2016, the loans serviced for others total $16.0 billion for reverse mortgage loans and $61.8 million for single family residential mortgage loans. |
Other Liabilities(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Equipment maintenance reserves | $ | 1,076.2 | $ | 1,012.4 | ||||||
Accounts payable and accrued expenses | 553.0 | 628.1 | ||||||||
Current taxes payable and deferred taxes | 399.5 | 363.1 | ||||||||
Security and other deposits | 198.8 | 263.0 | ||||||||
Fair value of derivative financial instruments | 154.6 | 103.0 | ||||||||
Accrued interest payable | 148.5 | 209.6 | ||||||||
Valuation adjustment relating to aerospace commitments | 68.9 | 73.1 | ||||||||
Other(1) | 568.8 | 506.4 | ||||||||
Total other liabilities | $ | 3,168.3 | $ | 3,158.7 |
(1) | Other consists of liabilities for taxes other than income, contingent liabilities and other miscellaneous liabilities. |
RISK MANAGEMENT
n | Strategic risk is the risk of 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 firm engages. |
n | 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. |
n | Asset risk is the equipment valuation and residual risk of leased 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. |
n | Market risk includes interest rate and foreign currency risk. Interest rate risk is the risk that fluctuations in interest rates will have an impact 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 risk that fluctuations in exchange rates between currencies can have an economic impact on the Company’s non-dollar denominated assets and liabilities. |
n | 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. |
n | 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. |
n | 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. |
n | 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. |
n | 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. |
n | Net Interest Income Sensitivity (“NII Sensitivity”), which measures the net impact of hypothetical changes in interest rates on forecasted net interest income from specific interest sensitive items assuming a static balance sheet over a twelve month period; and |
n | Economic Value of Equity (“EVE”), which measures the net impact of these hypothetical changes on the value of equity by assessing the economic value of assets, liabilities and derivatives. |
Change to NII Sensitivity and EVE
September 30, 2016 | June 30, 2016 | December 31, 2015 | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
+100 bps | –100 bps | +100 bps | –100 bps | +100 bps | –100 bps | |||||||||||||||||||||
NII Sensitivity | 3.7 | % | (2.1 | )% | 3.9 | % | (2.2 | )% | 3.5 | % | (2.1 | )% | ||||||||||||||
EVE | (1.2 | )% | 1.3 | % | (0.2 | )% | 0.0 | % | 0.5 | % | (0.5 | )% |
FUNDING AND LIQUIDITY
Investment Securities(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Available-for-sale securities | ||||||||||
Debt securities | $ | 2,729.2 | $ | 2,007.8 | ||||||
Equity securities | 34.8 | 14.3 | ||||||||
Held-to-maturity securities | ||||||||||
Debt securities | 254.4 | 300.1 | ||||||||
Securities carried at fair value with changes recorded in net income | ||||||||||
Debt securities | 301.3 | 339.7 | ||||||||
Non-marketable investments | 272.7 | 291.9 | ||||||||
Total investment securities | $ | 3,592.4 | $ | 2,953.8 |
n | A multi-year committed revolving credit facility with a total commitment of $1.5 billion, of which approximately $1.4 billion was unused at September 30, 2016; and |
n | Committed securitization facilities and secured bank lines totaled $3.6 billion, of which $2.3 billion was unused at September 30, 2016, provided that eligible assets are available that can be funded through these facilities. |
Funding Mix
September 30, 2016 | December 31, 2015 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Deposits | 66 | % | 64 | % | ||||||
Unsecured | 22 | % | 21 | % | ||||||
Secured Borrowings: | ||||||||||
Structured financings | 7 | % | 9 | % | ||||||
FHLB Advances | 5 | % | 6 | % |
Deposits(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total | Percent of Total | Total | Percent of Total | |||||||||||||||
Checking and Savings: | ||||||||||||||||||
Non-interest bearing checking | $ | 987.1 | 3.0 | % | $ | 866.2 | 2.6 | % | ||||||||||
Interest bearing checking | 3,074.8 | 9.3 | % | 3,123.7 | 9.5 | % | ||||||||||||
Money market / Sweeps(1) | 6,334.9 | 19.3 | % | 5,560.5 | 17.0 | % | ||||||||||||
Savings | 4,325.5 | 13.2 | % | 4,840.5 | 14.8 | % | ||||||||||||
Certificates of Deposits | 17,975.1 | 54.7 | % | 18,201.9 | 55.5 | % | ||||||||||||
Other | 156.9 | 0.5 | % | 189.4 | 0.6 | % | ||||||||||||
Total | $ | 32,854.3 | 100.0 | % | $ | 32,782.2 | 100.0 | % |
(1) | Includes deposit sweep arrangements related to money market and healthcare savings accounts. |
applicable accounting guidance, only the unutilized portion of the TRS is accounted for as a derivative and recorded at its estimated fair value. The size of the CIT Financial Ltd. financing facility with GSI is $1.5 billion (the “CFL Facility”) and the CIT TRS Funding B.V. financing facility with GSI is $625 million (the “BV Facility”).
Debt Ratings as of September 30, 2016
S&P | Fitch | Moody’s | DBRS | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
CIT Group Inc. | ||||||||||||||||||
Issuer / Counterparty Credit Rating | BB+ | BB+ | Ba3 | BB (High) | ||||||||||||||
Revolving Credit Facility Rating | BB+ | BB+ | Ba3 | BBB (Low) | ||||||||||||||
Series C Notes / Senior Unsecured Debt Rating | BB+ | BB+ | Ba3 | BB (High) | ||||||||||||||
Outlook | Stable | Stable | Stable | Stable | ||||||||||||||
CIT Bank, N.A. | ||||||||||||||||||
Deposit Rating (LT/ST) | NR | BBB-/F3 | Baa3/Prime 3 | BB (High)/R-4 | ||||||||||||||
Long-term Senior Unsecured Debt Rating | BBB- | BB+ | Baa3 | BB (High) | ||||||||||||||
Outlook | Stable | Stable | Stable | Positive |
Payments for the Twelve Months Ended September 30(1) (dollars in millions)
Total | 2017 | 2018 | 2019 | 2020 | 2021+ | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Structured financings(2) | $ | 3,553.9 | $ | 1,000.8 | $ | 571.6 | $ | 401.8 | $ | 328.7 | $ | 1,251.0 | ||||||||||||||
FHLB advances | 2,437.5 | 42.0 | 900.0 | 1,495.5 | – | – | ||||||||||||||||||||
Senior unsecured | 10,645.9 | 2,934.5 | 2,160.0 | 2,750.0 | 750.0 | 2,051.4 | ||||||||||||||||||||
Total Long-term borrowings | 16,637.3 | 3,977.3 | 3,631.6 | 4,647.3 | 1,078.7 | 3,302.4 | ||||||||||||||||||||
Deposits | 32,843.6 | 24,003.9 | 2,689.4 | 1,797.8 | 2,150.9 | 2,201.6 | ||||||||||||||||||||
Credit balances of factoring clients | 1,228.9 | 1,228.9 | – | – | – | – | ||||||||||||||||||||
Lease rental expense | 294.9 | 50.8 | 47.2 | 45.9 | 39.4 | 111.6 | ||||||||||||||||||||
Total contractual payments | $ | 51,004.7 | $ | 29,260.9 | $ | 6,368.2 | $ | 6,491.0 | $ | 3,269.0 | $ | 5,615.6 |
(1) | Projected payments of debt interest expense and obligations relating to post-retirement programs are excluded. |
(2) | Includes non-recourse secured borrowings, which are generally repaid in conjunction with the pledged receivable maturities. |
Commitment Expiration by Twelve Months Ended September 30(dollars in millions)
Total | 2017 | 2018 | 2019 | 2020 | 2021+ | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Financing commitments | $ | 6,743.2 | $ | 1,417.1 | $ | 855.1 | $ | 1,393.0 | $ | 1,249.9 | $ | 1,828.1 | ||||||||||||||
Aerospace purchase commitments(1) | 8,937.3 | 591.2 | 1,608.5 | 2,552.2 | 3,429.4 | 756.0 | ||||||||||||||||||||
Rail and other purchase commitments | 423.7 | 395.9 | 27.8 | – | – | – | ||||||||||||||||||||
Letters of credit | 241.3 | 43.4 | 29.7 | 65.6 | 24.6 | 78.0 | ||||||||||||||||||||
Deferred purchase agreements | 2,076.5 | 2,076.5 | – | – | – | – | ||||||||||||||||||||
Guarantees, acceptances and other recourse obligations | 2.4 | 2.4 | – | – | – | – | ||||||||||||||||||||
Liabilities for unrecognized tax obligations(2) | 38.0 | 5.0 | 33.0 | – | – | – | ||||||||||||||||||||
Total contractual commitments | $ | 18,462.4 | $ | 4,531.5 | $ | 2,554.1 | $ | 4,010.8 | $ | 4,703.9 | $ | 2,662.1 |
(1) | Aerospace commitments are net of amounts on deposit with manufacturers. |
(2) | The balance cannot be estimated past 2018; therefore the remaining balance is reflected in 2018. |
CAPITAL
2016 Dividends
Declaration Date | Payment Date | Per Share Dividend | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
January | February 26, 2016 | $ | 0.15 | |||||||
April | May 27, 2016 | $ | 0.15 | |||||||
July | August 26, 2016 | $ | 0.15 | |||||||
October | November 25, 2016 | $ | 0.15 |
Tier 1 Capital and Total Capital Components(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Transition Basis | Fully Phased-in Basis | Transition Basis | Fully Phased-in Basis | |||||||||||||||
Tier 1 Capital | ||||||||||||||||||
Total common stockholders’ equity | $ | 11,237.0 | $ | 11,237.0 | $ | 10,978.1 | $ | 10,978.1 | ||||||||||
Effect of certain items in accumulated other comprehensive loss excluded from Tier 1 Capital and qualifying noncontrolling interests | 55.3 | 55.3 | 76.9 | 76.9 | ||||||||||||||
Adjusted total equity | 11,292.3 | 11,292.3 | 11,055.0 | 11,055.0 | ||||||||||||||
Less: Goodwill(1) | (1,099.8 | ) | (1,099.8 | ) | (1,130.8 | ) | (1,130.8 | ) | ||||||||||
Disallowed deferred tax assets | (804.4 | ) | (804.4 | ) | (904.5 | ) | (904.5 | ) | ||||||||||
Disallowed intangible assets(1) | (71.3 | ) | (118.8 | ) | (53.6 | ) | (134.0 | ) | ||||||||||
Other Tier 1 components | (5.8 | ) | (17.9 | ) | (0.1 | ) | (0.1 | ) | ||||||||||
CET 1 Capital | 9,311.0 | 9,251.4 | 8,966.0 | 8,885.6 | ||||||||||||||
Tier 1 Capital | 9,311.0 | 9,251.4 | 8,966.0 | 8,885.6 | ||||||||||||||
Tier 2 Capital | ||||||||||||||||||
Qualifying reserve for credit losses and other reserves(2) | 469.3 | 469.3 | 403.3 | 403.3 | ||||||||||||||
Total qualifying capital | $ | 9,780.3 | $ | 9,720.7 | $ | 9,369.3 | $ | 9,288.9 | ||||||||||
Risk-weighted assets | $ | 66,802.2 | $ | 67,504.1 | $ | 69,563.6 | $ | 70,239.3 | ||||||||||
BHC Ratios | ||||||||||||||||||
CET 1 Capital Ratio | 13.9 | % | 13.7 | % | 12.9 | % | 12.7 | % | ||||||||||
Tier 1 Capital Ratio | 13.9 | % | 13.7 | % | 12.9 | % | 12.7 | % | ||||||||||
Total Capital Ratio | 14.6 | % | 14.4 | % | 13.5 | % | 13.2 | % | ||||||||||
Tier 1 Leverage Ratio | 14.4 | % | 14.3 | % | 13.5 | % | 13.4 | % | ||||||||||
CIT Bank, N.A. Ratios | ||||||||||||||||||
CET 1 Capital Ratio | 13.1 | % | 13.0 | % | 12.8 | % | 12.6 | % | ||||||||||
Tier 1 Capital Ratio | 13.1 | % | 13.0 | % | 12.8 | % | 12.6 | % | ||||||||||
Total Capital Ratio | 14.4 | % | 14.2 | % | 13.9 | % | 13.6 | % | ||||||||||
Tier 1 Leverage Ratio | 10.9 | % | 10.7 | % | 10.9 | % | 10.7 | % |
(1) | Goodwill and disallowed intangible assets adjustments include the respective portion of deferred tax liability in accordance with guidelines under Basel III. |
(2) | “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. |
Risk-Weighted Assets(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Balance sheet assets | $ | 65,965.5 | $ | 67,401.5 | ||||||
Risk weighting adjustments to balance sheet assets | (13,753.1 | ) | (13,728.1 | ) | ||||||
Off balance sheet items | 14,589.8 | 15,890.2 | ||||||||
Risk-weighted assets | $ | 66,802.2 | $ | 69,563.6 |
Tangible Book Value and per Share Amounts(dollars in millions, except per share amounts)
September 30, 2016 | December 31, 2015 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Total common stockholders’ equity | $ | 11,237.0 | $ | 10,978.1 | ||||||
Less: Goodwill | (1,170.5 | ) | (1,198.3 | ) | ||||||
Intangible assets | (161.3 | ) | (176.3 | ) | ||||||
Tangible book value | $ | 9,905.2 | $ | 9,603.5 | ||||||
Book value per share | $ | 55.62 | $ | 54.61 | ||||||
Tangible book value per share | $ | 49.02 | $ | 47.77 |
(1) | Tangible book value and tangible book value per share are non-GAAP measures. |
CIT BANK, N.A.
Condensed Balance Sheets(dollars in millions)
September 30, 2016 | December 31, 2015 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
ASSETS: | |||||||||||
Cash and deposits with banks | $ | 5,491.4 | $ | 6,073.5 | |||||||
Investment securities | 3,132.6 | 2,577.4 | |||||||||
Assets held for sale | 1,038.8 | 444.2 | |||||||||
Loans | 27,561.6 | 29,349.8 | |||||||||
Allowance for loan losses | (399.7 | ) | (337.5 | ) | |||||||
Operating lease equipment, net | 3,412.9 | 2,777.8 | |||||||||
Indemnification Assets | 362.2 | 414.8 | |||||||||
Goodwill | 810.3 | 830.8 | |||||||||
Intangible assets | 150.3 | 163.2 | |||||||||
Other assets | 936.8 | 1,006.1 | |||||||||
Assets of discontinued operations | 452.9 | 500.5 | |||||||||
Total Assets | $ | 42,950.1 | $ | 43,800.6 | |||||||
LIABILITIES AND EQUITY: | |||||||||||
Deposits | $ | 32,854.3 | $ | 32,782.2 | |||||||
FHLB advances | 2,438.2 | 3,117.6 | |||||||||
Borrowings | 355.5 | 798.3 | |||||||||
Other liabilities | 839.2 | 799.9 | |||||||||
Liabilities of discontinued operations | 927.8 | 696.2 | |||||||||
Total Liabilities | 37,415.0 | 38,194.2 | |||||||||
Total Equity | 5,535.1 | 5,606.4 | |||||||||
Total Liabilities and Equity | $ | 42,950.1 | $ | 43,800.6 | |||||||
Capital Ratios* | |||||||||||
Common Equity Tier 1 Capital | 13.0 | % | 12.6 | % | |||||||
Tier 1 Capital Ratio | 13.0 | % | 12.6 | % | |||||||
Total Capital Ratio | 14.3 | % | 13.6 | % | |||||||
Tier 1 Leverage ratio | 10.7 | % | 10.7 | % |
Financing and Leasing Assets by Segment(dollars in millions)
September 30, 2016 | December 31, 2015 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Commercial Banking | ||||||||||
Commercial Finance | $ | 8,552.5 | $ | 9,381.1 | ||||||
Commercial Real Estate | 5,413.9 | 5,357.6 | ||||||||
Business Capital | 5,002.2 | 4,692.1 | ||||||||
Total | 18,968.6 | 19,430.8 | ||||||||
Transportation Finance | ||||||||||
Aerospace | 1,216.8 | 2,007.7 | ||||||||
Rail | 3,095.8 | 2,209.7 | ||||||||
Maritime | 1,561.1 | 1,678.1 | ||||||||
Total | 5,873.7 | 5,895.5 | ||||||||
Consumer and Community | ||||||||||
Legacy Consumer Mortgages | 5,040.8 | 5,471.6 | ||||||||
Other Consumer Banking | 2,130.2 | 1,773.9 | ||||||||
Total | 7,171.0 | 7,245.5 | ||||||||
Total Financing and Leasing Assets | $ | 32,013.3 | $ | 32,571.8 |
Condensed Statements of Operations(dollars in millions)
Quarters Ended | Nine Months Ended | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||||||
Interest income | $ | 442.2 | $ | 442.7 | $ | 366.7 | $ | 1,331.1 | $ | 767.5 | ||||||||||||
Interest expense | (110.7 | ) | (110.6 | ) | (95.6 | ) | (332.1 | ) | (246.6 | ) | ||||||||||||
Net interest revenue | 331.5 | 332.1 | 271.1 | 999.0 | 520.9 | |||||||||||||||||
Provision for credit losses | (42.4 | ) | (31.5 | ) | (44.3 | ) | (166.4 | ) | (98.3 | ) | ||||||||||||
Net interest revenue, after credit provision | 289.1 | 300.6 | 226.8 | 832.6 | 422.6 | |||||||||||||||||
Rental income on operating leases | 101.4 | 94.3 | 76.0 | 287.9 | 215.2 | |||||||||||||||||
Other income | 116.2 | 80.9 | 33.4 | 241.3 | 85.9 | |||||||||||||||||
Total net revenue, net of interest expense and credit provision | 506.7 | 475.8 | 336.2 | 1,361.8 | 723.7 | |||||||||||||||||
Operating expenses | (257.3 | ) | (267.7 | ) | (184.1 | ) | (770.9 | ) | (401.6 | ) | ||||||||||||
Depreciation on operating lease equipment | (42.6 | ) | (38.9 | ) | (31.4 | ) | (118.2 | ) | (89.1 | ) | ||||||||||||
Maintenance and other operating lease expenses | (3.8 | ) | (9.9 | ) | (2.5 | ) | (16.3 | ) | (5.0 | ) | ||||||||||||
Loss on debt extinguishment and deposit redemption | (4.9 | ) | (2.4 | ) | – | (7.3 | ) | – | ||||||||||||||
Income before provision for income taxes | 198.1 | 156.9 | 118.2 | 449.1 | 228.0 | |||||||||||||||||
Provision for income taxes | (70.4 | ) | (58.7 | ) | (40.2 | ) | (159.5 | ) | (77.3 | ) | ||||||||||||
Income from continuing operations | 127.7 | 98.2 | 78.0 | 289.6 | 150.7 | |||||||||||||||||
Loss on discontinued operations | (15.6 | ) | (166.9 | ) | (3.7 | ) | (187.4 | ) | (3.7 | ) | ||||||||||||
Net (loss) income | $ | 112.1 | $ | (68.7 | ) | $ | 74.3 | $ | 102.2 | $ | 147.0 | |||||||||||
New business volume — funded | $ | 2,403.9 | $ | 2,484.0 | $ | 2,535.0 | $ | 6,871.5 | $ | 5,980.9 |
Net Finance Revenue(dollars in millions)
Quarters Ended | Nine Months Ended | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||||||
Interest income | $ | 442.2 | $ | 442.7 | $ | 366.7 | $ | 1,331.1 | $ | 767.5 | ||||||||||||
Rental income on operating leases | 101.4 | 94.3 | 76.0 | 287.9 | 215.2 | |||||||||||||||||
Finance revenue | 543.6 | 537.0 | 442.7 | 1,619.0 | 982.7 | |||||||||||||||||
Interest expense | (110.7 | ) | (110.6 | ) | (95.6 | ) | (332.1 | ) | (246.6 | ) | ||||||||||||
Depreciation on operating lease equipment | (42.6 | ) | (38.9 | ) | (31.4 | ) | (118.2 | ) | (89.1 | ) | ||||||||||||
Maintenance and other operating lease expenses | (3.8 | ) | (9.9 | ) | (2.5 | ) | (16.3 | ) | (5.0 | ) | ||||||||||||
Net finance revenue (“NFR”) | $ | 386.5 | $ | 377.6 | $ | 313.2 | $ | 1,152.4 | $ | 642.0 | ||||||||||||
Average Earning Assets (“AEA”)* | $ | 41,088.7 | $ | 41,340.6 | $ | 34,125.0 | $ | 41,326.6 | $ | 25,600.9 | ||||||||||||
As a % of AEA: | ||||||||||||||||||||||
Interest income | 4.30 | % | 4.29 | % | 4.30 | % | 4.29 | % | 4.00 | % | ||||||||||||
Rental income on operating leases | 0.99 | % | 0.91 | % | 0.89 | % | 0.93 | % | 1.12 | % | ||||||||||||
Finance revenue | 5.29 | % | 5.20 | % | 5.19 | % | 5.22 | % | 5.12 | % | ||||||||||||
Interest expense | (1.08 | )% | (1.07 | )% | (1.12 | )% | (1.07 | )% | (1.29 | )% | ||||||||||||
Depreciation on operating lease equipment | (0.41 | )% | (0.38 | )% | (0.37 | )% | (0.38 | )% | (0.46 | )% | ||||||||||||
Maintenance and other operating lease expenses | (0.04 | )% | (0.10 | )% | (0.03 | )% | (0.05 | )% | (0.03 | )% | ||||||||||||
Net finance margin (“NFM”) | 3.76 | % | 3.65 | % | 3.67 | % | 3.72 | % | 3.34 | % |
CRITICAL ACCOUNTING ESTIMATES
n | Allowance for Loan Losses |
n | Loan Impairment |
n | Fair Value Determination |
n | Lease Residual Values |
n | Liabilities for Uncertain Tax Positions |
n | Realizability of Deferred Tax Assets |
n | Goodwill Assets |
n | Contingent Liabilities |
INTERNAL CONTROLS WORKING GROUP
SELECT DATA AND AVERAGE BALANCE SHEETS
Select Data(dollars in millions)
At or for the Quarters Ended | Nine Months Ended | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | �� | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||||||
Select Statement of Operations Data | |||||||||||||||||||||||
Net interest revenue | $ | 210.7 | $ | 212.8 | $ | 157.4 | $ | 632.5 | $ | 185.7 | |||||||||||||
Provision for credit losses | (46.2 | ) | (28.1 | ) | (49.9 | ) | (173.6 | ) | (102.9 | ) | |||||||||||||
Total non-interest income | 637.5 | 673.6 | 578.5 | 1,987.4 | 1,790.7 | ||||||||||||||||||
Total non-interest expenses | (576.6 | ) | (582.9 | ) | (549.2 | ) | (1,741.1 | ) | (1,436.0 | ) | |||||||||||||
Income from continuing operations, net of tax | 148.4 | 181.1 | 696.8 | 481.2 | 915.8 | ||||||||||||||||||
Loss from discontinued operation, net of tax | (15.6 | ) | (167.0 | ) | – | (187.4 | ) | (3.7 | ) | ||||||||||||||
Net income | 132.8 | 14.1 | 693.1 | 293.8 | 912.1 | ||||||||||||||||||
Per Common Share Data | |||||||||||||||||||||||
Diluted income per common share — continuing operations | $ | 0.73 | $ | 0.90 | $ | 3.63 | $ | 2.38 | $ | 5.05 | |||||||||||||
Diluted income per common share | $ | 0.65 | $ | 0.07 | $ | 3.61 | $ | 1.45 | $ | 5.03 | |||||||||||||
Book value per common share | $ | 55.62 | $ | 55.07 | $ | 53.74 | |||||||||||||||||
Tangible book value per common share | $ | 49.02 | $ | 48.45 | $ | 47.09 | |||||||||||||||||
Dividends declared per common share | $ | 0.15 | $ | 0.15 | $ | 0.15 | $ | 0.45 | $ | 0.45 | |||||||||||||
Dividend payout ratio | 23.1 | % | 214.3 | % | 4.2 | % | 31.0 | % | 8.9 | % | |||||||||||||
Performance Ratios | |||||||||||||||||||||||
Return on average common stockholders’ equity | 4.74 | % | 0.50 | % | 27.54 | % | 3.51 | % | 13.20 | % | |||||||||||||
Return on tangible common equity | 6.01 | % | 7.37 | % | 31.00 | % | 6.54 | % | 14.50 | % | |||||||||||||
Adjusted return on tangible common equity | 7.45 | % | 8.27 | % | 2.57 | % | 7.58 | % | 4.62 | % | |||||||||||||
Net finance revenue as a percentage of average earning assets | 3.63 | % | 3.65 | % | 3.67 | % | 3.67 | % | 3.43 | % | |||||||||||||
Return on average earning assets | 1.01 | % | 1.22 | % | 5.31 | % | 1.09 | % | 2.70 | % | |||||||||||||
Return on average continuing operations total assets | 0.90 | % | 1.09 | % | 4.66 | % | 0.97 | % | 2.39 | % | |||||||||||||
Balance Sheet Data | |||||||||||||||||||||||
Loans including receivables pledged | $ | 29,918.2 | $ | 30,456.8 | $ | 32,406.2 | |||||||||||||||||
Allowance for loan losses | (421.7 | ) | (399.4 | ) | (335.0 | ) | |||||||||||||||||
Operating lease equipment, net | 16,954.8 | 16,864.6 | 15,538.2 | ||||||||||||||||||||
Goodwill | 1,170.5 | 1,169.7 | 1,135.1 | ||||||||||||||||||||
Total cash and deposits | 7,433.6 | 8,103.9 | 8,259.9 | ||||||||||||||||||||
Investment securities | 3,592.4 | 3,229.1 | 3,618.8 | ||||||||||||||||||||
Assets of discontinued operation | 452.9 | 469.1 | 513.8 | ||||||||||||||||||||
Total assets | 65,965.5 | 66,700.3 | 68,019.0 | ||||||||||||||||||||
Deposits | 32,854.3 | 32,879.1 | 32,328.9 | ||||||||||||||||||||
Borrowings | 16,548.7 | 17,510.1 | 19,214.0 | ||||||||||||||||||||
Liabilities of discontinued operation | 927.8 | 917.1 | 671.9 | ||||||||||||||||||||
Total common stockholders’ equity | 11,237.0 | 11,124.1 | 10,798.7 | ||||||||||||||||||||
Credit Quality | |||||||||||||||||||||||
Non-accrual loans as a percentage of finance receivables | 0.96 | % | 0.93 | % | 0.66 | % | |||||||||||||||||
Net charge-offs as a percentage of average finance receivables | 0.31 | % | 0.53 | % | 0.86 | % | 0.50 | % | 0.63 | % | |||||||||||||
Allowance for loan losses as a percentage of finance receivables | 1.41 | % | 1.31 | % | 1.03 | % | |||||||||||||||||
Capital Ratios | |||||||||||||||||||||||
Total ending equity to total ending assets | 17.0 | % | 16.7 | % | 15.9 | % | |||||||||||||||||
Common Equity Tier 1 Capital Ratio (fully phased-in) | 13.7 | % | 13.4 | % | 12.5 | % | |||||||||||||||||
Total Capital Ratio (fully phased-in) | 14.4 | % | 14.1 | % | 13.0 | % |
Average Balances and Rates(1)(dollars in millions)
Quarters Ended | |||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | |||||||||||||||||||||||||||||||||||||
Average Balance | Revenue / Expense | Average Rate (%) | Average Balance | Revenue / Expense | Average Rate (%) | Average Balance | Revenue / Expense | Average Rate (%) | |||||||||||||||||||||||||||||||
Interest bearing deposits | $ | 6,916.0 | $ | 9.5 | 0.55 | % | $ | 7,113.5 | $ | 8.9 | 0.50 | % | $ | 5,812.4 | $ | 4.5 | 0.31 | % | |||||||||||||||||||||
Securities purchased under agreements to resell | – | – | – | – | – | – | 387.5 | 0.6 | 0.62 | % | |||||||||||||||||||||||||||||
Investment securities | 3,411.1 | 23.0 | 2.70 | % | 3,130.6 | 22.8 | 2.91 | % | 2,663.2 | 18.4 | 2.76 | % | |||||||||||||||||||||||||||
Loans (including held for sale)(2),(3) | |||||||||||||||||||||||||||||||||||||||
U.S.(2) | 31,386.7 | 436.4 | 5.79 | % | 31,784.4 | 447.8 | 5.87 | % | 27,320.5 | 370.0 | 5.72 | % | |||||||||||||||||||||||||||
Non-U.S. | 1,122.7 | 25.4 | 9.05 | % | 1,160.2 | 24.4 | 8.41 | % | 1,971.6 | 43.9 | 8.91 | % | |||||||||||||||||||||||||||
Total loans(2) | 32,509.4 | 461.8 | 5.91 | % | 32,944.6 | 472.2 | 5.96 | % | 29,292.1 | 413.9 | 5.95 | % | |||||||||||||||||||||||||||
Total interest earning assets / interest income(2),(3) | 42,836.5 | 494.3 | 4.75 | % | 43,188.7 | 503.9 | 4.81 | % | 38,155.2 | 437.4 | 4.77 | % | |||||||||||||||||||||||||||
Operating lease equipment, net (including held for sale)(4) | |||||||||||||||||||||||||||||||||||||||
U.S.(4) | 9,010.1 | 164.7 | 7.31 | % | 8,922.0 | 168.9 | 7.57 | % | 8,114.8 | 177.5 | 8.75 | % | |||||||||||||||||||||||||||
Non-U.S.(4) | 8,026.5 | 159.4 | 7.94 | % | 8,003.5 | 159.1 | 7.95 | % | 7,330.3 | 146.8 | 8.01 | % | |||||||||||||||||||||||||||
Total operating lease equipment, net(4) | 17,036.6 | 324.1 | 7.61 | % | 16,925.5 | 328.0 | 7.75 | % | 15,445.1 | 324.3 | 8.40 | % | |||||||||||||||||||||||||||
Indemnification assets | 366.3 | (4.2 | ) | (4.59 | )% | 379.8 | (8.6 | ) | (9.06 | )% | 305.6 | 0.3 | 0.39 | % | |||||||||||||||||||||||||
Total earning assets(2) | 60,239.4 | $ | 814.2 | 5.52 | % | 60,494.0 | $ | 823.3 | 5.56 | % | 53,905.9 | $ | 762.0 | 5.81 | % | ||||||||||||||||||||||||
Non interest earning assets | |||||||||||||||||||||||||||||||||||||||
Cash due from banks | 952.0 | 1,051.4 | 1,902.6 | ||||||||||||||||||||||||||||||||||||
Allowance for loan losses | (404.4 | ) | (398.9 | ) | (347.9 | ) | |||||||||||||||||||||||||||||||||
All other non-interest earning assets | 5,270.4 | 5,278.8 | 4,323.5 | ||||||||||||||||||||||||||||||||||||
Assets of discontinued operation | 461.0 | 479.9 | 333.8 | ||||||||||||||||||||||||||||||||||||
Total Average Assets | $ | 66,518.4 | $ | 66,905.2 | $ | 60,117.9 | |||||||||||||||||||||||||||||||||
Average Liabilities | |||||||||||||||||||||||||||||||||||||||
Borrowings | |||||||||||||||||||||||||||||||||||||||
Deposits | $ | 31,732.9 | $ | 99.4 | 1.25 | % | $ | 31,643.5 | $ | 99.4 | 1.26 | % | $ | 26,220.3 | $ | 89.7 | 1.37 | % | |||||||||||||||||||||
Borrowings | 17,117.2 | 180.0 | 4.21 | % | 17,853.7 | 183.1 | 4.10 | % | 18,148.4 | 190.6 | 4.20 | % | |||||||||||||||||||||||||||
Total interest-bearing liabilities | 48,850.1 | 279.4 | 2.29 | % | 49,497.2 | 282.5 | 2.28 | % | 44,368.7 | 280.3 | 2.53 | % | |||||||||||||||||||||||||||
Non-interest bearing deposits | 1,197.4 | 1,124.9 | 739.8 | ||||||||||||||||||||||||||||||||||||
Credit balances of factoring clients | 1,234.1 | 1,264.9 | 1,457.8 | ||||||||||||||||||||||||||||||||||||
Other non-interest bearing liabilities | 3,109.7 | 3,093.3 | 3,054.0 | ||||||||||||||||||||||||||||||||||||
Liabilities of discontinued operation | 916.1 | 738.1 | 432.0 | ||||||||||||||||||||||||||||||||||||
Noncontrolling interests | 0.5 | 0.5 | 0.5 | ||||||||||||||||||||||||||||||||||||
Stockholders’ equity | 11,210.5 | 11,186.3 | 10,065.1 | ||||||||||||||||||||||||||||||||||||
Total Average Liabilities and Stockholders’ Equity | $ | 66,518.4 | $ | 66,905.2 | $ | 60,117.9 | |||||||||||||||||||||||||||||||||
Net revenue spread | 3.23 | % | 3.28 | % | 3.28 | % | |||||||||||||||||||||||||||||||||
Impact of non-interest bearing sources | 0.40 | % | 0.37 | % | 0.39 | % | |||||||||||||||||||||||||||||||||
Net revenue/yield on earning assets(2) | $ | 534.8 | 3.63 | % | $ | 540.8 | 3.65 | % | $ | 481.7 | 3.67 | % |
Nine Months Ended | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | September 30, 2015 | |||||||||||||||||||||||||
Average Balance | Revenue / Expense | Average Rate (%) | Average Balance | Revenue / Expense | Average Rate (%) | |||||||||||||||||||||
Interest bearing deposits | $ | 7,035.6 | $ | 26.7 | 0.51 | % | $ | 5,499.0 | $ | 11.9 | 0.29 | % | ||||||||||||||
Securities purchased under agreements to resell | – | – | – | 535.0 | 2.3 | 0.57 | % | |||||||||||||||||||
Investment securities | 3,173.5 | 68.4 | 2.87 | % | 1,911.3 | 26.9 | 1.88 | % | ||||||||||||||||||
Loans (including held for sale)(2),(3) | ||||||||||||||||||||||||||
U.S.(2) | 31,714.4 | 1,325.4 | 5.81 | % | 21,133.6 | 816.1 | 5.53 | % | ||||||||||||||||||
Non-U.S. | 1,199.3 | 76.2 | 8.47 | % | 2,118.3 | 145.0 | 9.13 | % | ||||||||||||||||||
Total loans(2) | 32,913.7 | 1,401.6 | 5.91 | % | 23,251.9 | 961.1 | 5.88 | % | ||||||||||||||||||
Total interest earning assets / interest income(2),(3) | 43,122.8 | 1,496.7 | 4.77 | % | 31,197.2 | 1,002.2 | 4.50 | % | ||||||||||||||||||
Operating lease equipment, net (including held for sale)(4) | ||||||||||||||||||||||||||
U.S.(4) | 8,919.5 | 519.2 | 7.76 | % | 7,923.0 | 530.7 | 8.93 | % | ||||||||||||||||||
Non-U.S.(4) | 7,970.3 | 476.8 | 7.98 | % | 7,386.9 | 445.8 | 8.05 | % | ||||||||||||||||||
Total operating lease equipment, net(4) | 16,889.8 | 996.0 | 7.86 | % | 15,309.9 | 976.5 | 8.50 | % | ||||||||||||||||||
Indemnification assets | 382.6 | (15.9 | ) | (5.54 | )% | 103.0 | 0.3 | 0.39 | % | |||||||||||||||||
Total earning assets(2) | 60,395.2 | $ | 2,476.8 | 5.59 | % | 46,610.1 | $ | 1,979.0 | 5.85 | % | ||||||||||||||||
Non interest earning assets | ||||||||||||||||||||||||||
Cash due from banks | 1,131.1 | 1,282.5 | ||||||||||||||||||||||||
Allowance for loan losses | (389.5 | ) | (350.4 | ) | ||||||||||||||||||||||
All other non-interest earning assets | 5,292.9 | 3,608.2 | ||||||||||||||||||||||||
Assets of discontinued operation | 478.5 | 112.5 | ||||||||||||||||||||||||
Total Average Assets | $ | 66,908.2 | $ | 51,262.9 | ||||||||||||||||||||||
Average Liabilities | ||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||
Deposits | $ | 31,725.2 | $ | 298.3 | 1.25 | % | $ | 19,799.1 | $ | 230.9 | 1.55 | % | ||||||||||||||
Borrowings | 17,720.2 | 550.0 | 4.14 | % | 17,409.8 | 585.9 | 4.49 | % | ||||||||||||||||||
Total interest-bearing liabilities | 49,445.4 | 848.3 | 2.29 | % | 37,208.9 | 816.8 | 2.93 | % | ||||||||||||||||||
Non-interest bearing deposits | 1,140.8 | 315.6 | ||||||||||||||||||||||||
Credit balances of factoring clients | 1,277.0 | 1,467.2 | ||||||||||||||||||||||||
Other non-interest bearing liabilities | 3,099.3 | 2,916.4 | ||||||||||||||||||||||||
Liabilities of discontinued operation | 777.6 | 145.6 | ||||||||||||||||||||||||
Noncontrolling interests | 0.5 | (1.3 | ) | |||||||||||||||||||||||
Stockholders’ equity | 11,167.6 | 9,210.5 | ||||||||||||||||||||||||
Total Average Liabilities and Stockholders’ Equity | $ | 66,908.2 | $ | 51,262.9 | ||||||||||||||||||||||
Net revenue spread | 3.30 | % | 2.92 | % | ||||||||||||||||||||||
Impact of non-interest bearing sources | 0.37 | % | 0.51 | % | ||||||||||||||||||||||
Net revenue/yield on earning assets(2) | $ | 1,628.5 | 3.67 | % | $ | 1,162.2 | 3.43 | % |
(1) | Average rates are impacted by PAA accretion and amortization. |
(2) | The balance and 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. |
NON-GAAP FINANCIAL MEASUREMENTS
Total Net Revenue(1) and Net Operating Lease Revenue(2)(dollars in millions)
Quarters Ended | Nine Months Ended | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||||||
Total Net Revenue | ||||||||||||||||||||||
Interest income | $ | 490.1 | $ | 495.3 | $ | 437.7 | $ | 1,480.8 | $ | 1,002.5 | ||||||||||||
Rental income on operating leases | 563.6 | 569.3 | 539.3 | 1,708.3 | 1,601.6 | |||||||||||||||||
Finance revenue | 1,053.7 | 1,064.6 | 977.0 | 3,189.1 | 2,604.1 | |||||||||||||||||
Interest expense | (279.4 | ) | (282.5 | ) | (280.3 | ) | (848.3 | ) | (816.8 | ) | ||||||||||||
Depreciation on operating lease equipment | (179.1 | ) | (176.4 | ) | (159.1 | ) | (530.8 | ) | (473.7 | ) | ||||||||||||
Maintenance and other operating lease expenses | (60.4 | ) | (64.9 | ) | (55.9 | ) | (181.5 | ) | (151.4 | ) | ||||||||||||
Net finance revenue | 534.8 | 540.8 | 481.7 | 1,628.5 | 1,162.2 | |||||||||||||||||
Other income | 73.9 | 104.3 | 39.2 | 279.1 | 189.1 | |||||||||||||||||
Total net revenue | $ | 608.7 | $ | 645.1 | $ | 520.9 | $ | 1,907.6 | $ | 1,351.3 | ||||||||||||
NFR as a % of AEA | 3.63 | % | 3.65 | % | 3.67 | % | 3.67 | % | 3.43 | % | ||||||||||||
Net Operating Lease Revenue | ||||||||||||||||||||||
Rental income on operating leases | $ | 563.6 | $ | 569.3 | $ | 539.3 | $ | 1,708.3 | $ | 1,601.6 | ||||||||||||
Depreciation on operating lease equipment | (179.1 | ) | (176.4 | ) | (159.1 | ) | (530.8 | ) | (473.7 | ) | ||||||||||||
Maintenance and other operating lease expenses | (60.4 | ) | (64.9 | ) | (55.9 | ) | (181.5 | ) | (151.4 | ) | ||||||||||||
Net operating lease revenue | $ | 324.1 | $ | 328.0 | $ | 324.3 | $ | 996.0 | $ | 976.5 |
Operating Expenses Excluding Certain Costs(3)(dollars in millions)
Quarters Ended | Nine Months Ended | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||||||
Operating expenses | $ | 332.0 | $ | 337.5 | $ | 333.9 | $ | 1,018.0 | $ | 810.5 | ||||||||||||
Intangible asset amortization | (6.4 | ) | (6.4 | ) | (5.0 | ) | (19.2 | ) | (6.1 | ) | ||||||||||||
Provision for severance and facilities exiting activities | (2.3 | ) | (9.7 | ) | (5.1 | ) | (32.3 | ) | (5.2 | ) | ||||||||||||
Operating expenses excluding restructuring costs and intangible asset amortization | $ | 323.3 | $ | 321.4 | $ | 323.8 | $ | 966.5 | $ | 799.2 | ||||||||||||
Operating expenses as a % of AEA | 2.25 | % | 2.28 | % | 2.55 | % | 2.30 | % | 2.39 | % | ||||||||||||
Operating expenses excluding restructuring costs and intangible amortization(3) | 2.19 | % | 2.17 | % | 2.47 | % | 2.18 | % | 2.36 | % | ||||||||||||
Total Net Revenue | $ | 608.7 | $ | 645.1 | $ | 520.9 | $ | 1,907.6 | $ | 1,351.3 | ||||||||||||
Net Efficiency Ratio(4) | 53.1 | % | 49.8 | % | 62.2 | % | 50.7 | % | 59.1 | % |
Earning Assets(5)(dollars in millions)
September 30, 2016 | June 30, 2016 | December 31, 2015 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Loans | $ | 29,918.2 | $ | 30,456.8 | $ | 31,671.7 | ||||||||
Operating lease equipment, net | 16,954.8 | 16,864.6 | 16,617.0 | |||||||||||
Interest bearing cash | 6,513.1 | 7,082.8 | 6,820.3 | |||||||||||
Investment securities | 3,592.4 | 3,229.1 | 2,953.8 | |||||||||||
Assets held for sale | 2,462.1 | 2,403.3 | 2,092.4 | |||||||||||
Indemnification assets | 362.2 | 375.5 | 414.8 | |||||||||||
Credit balances of factoring clients | (1,228.9 | ) | (1,215.2 | ) | (1,344.0 | ) | ||||||||
Total earning assets | $ | 58,573.9 | $ | 59,196.9 | $ | 59,226.0 | ||||||||
Average Earning Assets (for the respective quarters) | $ | 59,005.4 | $ | 59,229.2 | $ | 59,141.5 |
Tangible Book Value(6)(dollars in millions)
Quarters Ended | Nine Months Ended | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||||||||||
Total common stockholders’ equity | $ | 11,237.0 | $ | 11,124.1 | $ | 10,798.7 | $ | 11,237.0 | $ | 10,798.7 | |||||||||||||
Less: Goodwill | (1,170.5 | ) | (1,169.7 | ) | (1,135.1 | ) | (1,170.5 | ) | (1,135.1 | ) | |||||||||||||
Intangible assets | (161.3 | ) | (168.9 | ) | (201.3 | ) | (161.3 | ) | (201.3 | ) | |||||||||||||
Tangible book value | 9,905.2 | 9,785.5 | 9,462.3 | 9,905.2 | 9,462.3 | ||||||||||||||||||
Less: disallowed deferred tax asset | (804.5 | ) | (842.4 | ) | (867.4 | ) | (804.5 | ) | (867.4 | ) | |||||||||||||
Adjusted tangible common equity(7) | $ | 9,100.7 | $ | 8,943.1 | $ | 8,594.9 | $ | 9,100.7 | $ | 8,594.9 | |||||||||||||
Income from continuing operations | $ | 148.4 | $ | 181.1 | $ | 696.8 | $ | 481.2 | $ | 915.8 | |||||||||||||
Adjustments: intangible assets amortization, net of tax | 4.6 | 4.3 | 3.8 | 13.3 | 4.5 | ||||||||||||||||||
Valuation reversal | 15.7 | – | (646.8 | ) | 15.7 | (646.8 | ) | ||||||||||||||||
Adjusted net income | $ | 168.7 | $ | 185.4 | $ | 53.8 | $ | 510.2 | $ | 273.5 | |||||||||||||
Average tangible common equity | $ | 9,875.3 | $ | 9,829.7 | $ | 8,990.9 | $ | 9,813.1 | $ | 8,420.9 | |||||||||||||
Less: average disallowed deferred tax asset | (823.4 | ) | (858.2 | ) | (603.5 | ) | (840.3 | ) | (521.8 | ) | |||||||||||||
Average adjusted tangible common equity | $ | 9,051.9 | $ | 8,971.5 | $ | 8,387.4 | $ | 8,972.8 | $ | 7,899.1 | |||||||||||||
Adjusted return on tangible common equity(7) | 7.45 | % | 8.27 | % | 2.57 | % | 7.58 | % | 4.62 | % |
Continuing Operations Total Assets(8)(dollars in millions)
September 30, 2016 | June 30, 2016 | September 30, 2015 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total assets | $ | 65,965.5 | $ | 66,700.3 | $ | 68,019.0 | ||||||||
Assets of discontinued operation | (452.9 | ) | (469.1 | ) | (513.8 | ) | ||||||||
Continuing operations total assets | $ | 65,512.6 | $ | 66,231.2 | $ | 67,505.2 |
Effective Tax Rate Reconciliation(9)(dollars in millions)
Quarters Ended | Nine Months Ended | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||||||
Provision (benefit) for income taxes | $ | 77.0 | $ | 94.3 | $ | (560.0 | ) | $ | 224.0 | $ | (478.2 | ) | ||||||||||
Discrete items | (15.6 | ) | (3.9 | ) | 592.6 | (8.4 | ) | 597.8 | ||||||||||||||
Provision for income taxes, before discrete items | $ | 61.4 | $ | 90.4 | $ | 32.6 | $ | 215.6 | $ | 119.6 | ||||||||||||
Income from continuing operations before provision for income taxes | $ | 225.4 | $ | 275.4 | $ | 136.8 | $ | 705.2 | $ | 437.5 | ||||||||||||
Effective tax rate | 34.2 | % | 34.2 | % | (409.4 | )% | 31.8 | % | (109.3 | )% | ||||||||||||
Effective tax rate, before discrete items | 27.2 | % | 32.8 | % | 23.8 | % | 30.6 | % | 27.3 | % |
(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, net finance revenue as a percent of AEA 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 and intangible asset amortization is a non-GAAP measure used by management to compare period over period expenses. |
(4) | Net efficiency ratio is a non-GAAP measurement used by management to measure operating expenses (before restructuring costs and intangible amortization) to total net revenues. The efficiency ratio is used to compare how much revenue is being generated to how much is being spent in a given time period. |
(5) | 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. |
(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. |
(7) | Return on average tangible common equity is adjusted to remove the impact of intangible amortization, goodwill impairment and the impact from valuation allowance reversals from income from continuing operations, while the average tangible common equity is reduced for disallowed deferred tax assets. Return on average tangible common equity is another metric used to evaluate our use of equity. |
(8) | Continuing operations total assets is a non-GAAP measure, which management uses for analytical purposes to compare balance sheet assets on a consistent basis. |
(9) | The provision for income before discrete items and the respective effective tax rate are non-GAAP measures, which management uses for analytical purposes to understand the Company’s tax rate on a more consistent basis. |
FORWARD-LOOKING STATEMENTS
n | 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, |
n | our plans to change our funding mix and to access new sources of funding to broaden our use of deposit taking capabilities, |
n | our pending or potential acquisition and disposition plans, and the integration and restructuring risks inherent in such acquisitions, including our August 2015 acquisition of OneWest Bank and our pending sale of the Commercial Air leasing business, |
n | our credit risk management and credit quality, |
n | our asset/liability risk management, |
n | our funding, borrowing costs and net finance revenue, |
n | our operational risks, including risk of operational errors, failure of operational controls, success of systems enhancements and expansion of risk management and control functions, |
n | our mix of portfolio asset classes, including changes resulting from growth initiatives, new business initiatives, new products, acquisitions and divestitures, new business and customer retention, |
n | legal risks, including related to the enforceability of our agreements and to changes in laws and regulations, |
n | our growth rates, |
n | our commitments to extend credit or purchase equipment, and |
n | how we may be affected by legal proceedings. |
n | capital markets liquidity, |
n | risks of and/or actual economic slowdown, downturn or recession, |
n | industry cycles and trends, |
n | uncertainties associated with risk management, including credit, prepayment, asset/liability, interest rate and currency risks, |
n | adequacy of reserves for credit losses, |
n | risks inherent in changes in market interest rates and quality spreads, |
n | funding opportunities, deposit taking capabilities and borrowing costs, |
n | conditions and/or changes in funding markets and our access to such markets, including the secured and unsecured debt and asset-backed securitization markets, |
n | risks of implementing new processes, procedures, and systems, including any new processes, procedures, and systems required to comply with the additional laws and regulations applicable to systematically important financial institutions, |
n | risks associated with the value and recoverability of leased equipment and related lease residual values, |
n | risks of failing to achieve the projected revenue growth from new business initiatives or the projected expense reductions from efficiency improvements, |
n | application of fair value accounting in volatile markets, |
n | application of goodwill accounting in a recessionary economy, |
n | changes in laws or regulations governing our business and operations, or affecting our assets, including our operating lease equipment, |
n | changes in competitive factors, |
n | demographic trends, |
n | customer retention rates, |
n | risks associated with dispositions of businesses or asset portfolios, including how to replace the income associated with such businesses or asset portfolios and the risk of residual liabilities from such businesses or portfolios, |
n | risks associated with acquisitions of businesses or asset portfolios and the risks of integrating such acquisitions, including the integration of OneWest Bank, and |
n | regulatory changes and/or developments. |
1) | Implement a data quality control program. |
2) | Enhance controls over documentation of detailed data sources. |
3) | Simplify the reserve estimation process and improve governance, controls and documentation. |
Unregistered Sales of Equity Securities and Use of Proceeds |
(a) | 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). | |||
2.2 | Amendment No. 1, dated as of July 21, 2015, to the Agreement and Plan of Merger, by and among CIT Group Inc., IMB HoldCo I L.P., 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 27, 2015). | |||
3.1 | Fourth Restated Certificate of Incorporation of the Company, as filed with the Office of the Secretary of State of the State of Delaware on May 17, 2016 (incorporated by reference to Exhibit 3.1 to Form 8-K filed May 17, 2016). | |||
3.2 | Amended and Restated By-laws of the Company, as amended through May 10, 2016 (incorporated by reference to Exhibit 3.2 to Form 8-K filed May 17, 2016). | |||
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 | First Supplemental Indenture dated as of February 13, 2007 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 4.1 to Form 8-K filed on February 13, 2007). | |||
4.3 | Third Supplemental Indenture dated as of October 1, 2009, between CIT Group Inc. and The Bank of New York Mellon (as successor to JPMorgan Chase Bank N.A.) relating to senior debt securities (incorporated by reference to Exhibit 4.4 to Form 8-K filed on October 7, 2009). | |||
4.4 | Fourth Supplemental Indenture dated as of October 16, 2009 between CIT Group Inc. and The Bank of New York Mellon (as successor to JPMorgan Chase Bank N.A.) relating to senior debt securities (incorporated by reference to Exhibit 4.1 to Form 8-K filed October 19, 2009). | |||
4.5 | 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). | |||
4.6 | 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). |
4.7 | 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). | |||
4.8 | 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). | |||
4.9 | 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). | |||
4.10 | 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). | |||
4.11 | 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). | |||
4.12 | 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). | |||
4.13 | 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). | |||
4.14 | 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). | |||
4.15 | 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). | |||
4.16 | 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). |
4.17 | 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). | |||
4.18 | 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). | |||
4.19 | 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). | |||
4.20 | 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). | |||
4.21 | 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). | |||
4.22 | 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). | |||
4.23 | 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). | |||
4.24 | Second Amended and Restated Revolving Credit and Guaranty Agreement, dated as of February 17, 2016, 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 February 18, 2016). | |||
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. 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). | |||
10.6* | 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). | |||
10.7* | 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). | |||
10.8* | 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). |
10.9** | 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). | |||
10.10** | 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 (incorporated by reference to Exhibit 10.32 to Form 10-Q filed August 9, 2012). | |||
10.11** | 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 (incorporated by reference to Exhibit 10.33 to Form 10-Q filed August 9, 2012). | |||
10.12** | ISDA Master Agreement and Credit Support Annex, each dated June 6, 2008, between CIT Financial Ltd. and Goldman Sachs International (incorporated by reference to Exhibit 10.34 to Form 10-Q filed August 11, 2008). | |||
10.13* | 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). | |||
10.14* | 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). | |||
10.15* | 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). | |||
10.16 | 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). | |||
10.17* | Form of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (with Performance Based Vesting) (2013) (incorporated by reference to Exhibit 10.30 to Form 10-K filed February 20, 2015). | |||
10.18* | Form of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (with Performance Based Vesting) (2013) (Executives with Employment Agreements) (incorporated by reference to Exhibit 10.31 to Form 10-K filed February 20, 2015). | |||
10.19* | Form of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (with Performance Based Vesting) (2014) (incorporated by reference to Exhibit 10.32 to Form 10-K filed February 20, 2015). | |||
10.20* | Form of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (with Performance Based Vesting) (Executives with Employment Agreements) (2014) (incorporated by reference to Exhibit 10.33 to Form 10-K filed February 20, 2015). | |||
10.21* | Form of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (2013) (incorporated by reference to Exhibit 10.30 to Form 10-Q filed August 5, 2015). | |||
10.22* | Form of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (2013) (Executives with Employment Agreements) (incorporated by reference to Exhibit 10.31 to Form 10-Q filed August 5, 2015). | |||
10.23* | Form of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (2014) (Executives with Employment Agreements) (incorporated by reference to Exhibit 10.32 to Form 10-Q filed August 5, 2015). | |||
10.24* | Form of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (2014) (incorporated by reference to Exhibit 10.33 to Form 10-Q filed August 5, 2015). | |||
10.25* | Form of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (2015) (with ROTCE and Credit Provision Performance Measures) (incorporated by reference to Exhibit 10.34 to Form 10-Q filed August 5, 2015). | |||
10.26* | Form of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (2015) (with ROTCE and Credit Provision Performance Measures) (Executives with Employment Agreements) (incorporated by reference to Exhibit 10.35 to Form 10-Q filed August 5, 2015). | |||
10.27* | Form of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (2015) (with Average Earnings per Share and Average Pre-Tax Return on Assets Performance Measures) (incorporated by reference to Exhibit 10.36 to Form 10-Q filed August 5, 2015). | |||
10.28* | Form of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (2015) (with Average Earnings per Share and Average Pre-Tax Return on Assets Performance Measures) (Executives with Employment Agreements) (incorporated by reference to Exhibit 10.37 to Form 10-Q filed August 5, 2015). |
10.29* | Retention Letter Agreement, dated July 21, 2014, between CIT Group Inc. and Steven T. Mnuchin (incorporated by reference to Exhibit 10.2 to Form 8-K filed July 25, 2014). | |||
10.30* | Offer Letter, dated October 27, 2015, between CIT Group Inc. and Ellen R. Alemany, including Attached Exhibits. (incorporated by reference to Exhibit 10.39 to Form 10-Q filed November 13, 2015). | |||
10.31 | Nomination and Support Agreement dated February 18, 2016 by and between J.C. Flowers & Co. LLC and CIT Group Inc. (incorporated by reference to Exhibit 99.1 to Form 8-K filed February 22, 2016). | |||
10.32* | Form of CIT Group Inc. Long-term Incentive Plan Restricted Stock Unit Award Agreement (with Performance Based Vesting) (2016) (incorporated by reference to Exhibit 10.37 to Form 10-Q filed May 9, 2016). | |||
10.33* | Form of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (with Performance Based Vesting) (Executives with Employment Agreements) (2016) (incorporated by reference to Exhibit 10.38 to Form 10-Q filed May 9, 2016). | |||
10.34* | Form of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (with ROTCE and Credit Provision Performance Measures) (2016) (incorporated by reference to Exhibit 10.39 to Form 10-Q filed May 9, 2016). | |||
10.35* | Form of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (with ROTCE and Credit Provision Performance Measures) (Executives with Employment Agreements) (2016) (incorporated by reference to Exhibit 10.40 to Form 10-Q filed May 9, 2016). | |||
10.36* | Form of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (with Performance Based Vesting) (2015) (incorporated by reference to Exhibit 10.36 to Form 10-Q filed August 15, 2016). | |||
10.37* | Form of CIT Group Inc. Omnibus Incentive Plan Restricted Stock Unit Director Award Agreement (Stock Settled, One Year or Three Year Vesting) (incorporated by reference to Exhibit 10.37 to Form 10-Q filed August 15, 2016). | |||
10.38* | Form of CIT Group Inc. Omnibus Incentive Plan Restricted Stock Unit Director Award Agreement (Cash and Stock Settled, One Year or Three Year Vesting) (incorporated by reference to Exhibit 10.38 to Form 10-Q filed August 15, 2016). | |||
10.39* | Employment Agreement, dated as of July 5, 2016, between CIT Aerospace LLC and C. Jeffrey Knittel (incorporated by reference to Exhibit 10.1 to Form 8-K filed July 11, 2016). | |||
10.40* | CIT Employee Severance Plan (As Amended and Restated Effective January 1, 2017) (filed herein) | |||
12.1 | CIT Group Inc. and Subsidiaries Computation of Ratio of Earnings to Fixed Charges. | |||
31.1 | Certification of Ellen R. Alemany 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 E. Carol Hayles 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 Ellen R. Alemany 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 E. Carol Hayles 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-Q for the quarter ended September 30, 2016, 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. |
November 9, 2016 | CIT GROUP INC. | |||||
/s/ E. Carol Hayles | ||||||
E. Carol Hayles | ||||||
Executive Vice President and Chief Financial Officer | ||||||
/s/ Edward K. Sperling | ||||||
Edward K. Sperling | ||||||
Executive Vice President and Controller |