CIT - Earnings call transcript Q2 2020

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Operator

Good morning and welcome to CIT’s Second Quarter 2020 Earnings Conference Call. My name is Rocco and I will be your operator today. At this time, all participants are in a listen-only mode. There will be a question-and-answer session later in the call. [Operator Instructions] As a reminder, this conference is being recorded. to Investor call Relations. like Callahan, to now of Head would turn over the Barbara I Please ma’am. proceed,

Barbara Callahan

Thank you, Rocco. second quarter Good morning and earnings call. welcome conference XXXX to CIT’s

and hosted Our will for Marisa the our CFO. by Harney. CEO; is us and discussion Credit Ellen Also call joining John be Alemany, Chief today Q&A our Fawcett, Chairwoman Officer,

our During the Investor on that is website cit.com. this at available call, we’ll be referencing section presentation of a Relations

earnings reconciliations prepared it Our within With materials questions-and-answers forward-looking today’s and included cover and materials, now non-GAAP over SEC presentation are segment Alemany. statements comments These filings. turn call. Ellen that, I’ll our in disclosure to the of our today’s and

Ellen Alemany

continued carried Good And and Thanks, morning, than to to to the over first thanks the everyone, in call. degree lesser broader although financial we second that quarter, joining experienced the economy. the results pandemic a in has Barbara. for affect our has The COVID-XX quarter.

factoring exposure. $XX to retail this due posted but team this with some the CIT transformation primarily million store in the interest along turbulent a in into strength and holding period; began go of a share. foundation As revenue, will position reinforcing net the this and to lower bankruptcy our common strength elevated single factors $XX acquisition lower the a agility detailed the we period account key completion million to multi-year during related adding levels navigate John our capability. rates net to That of quarter, unprecedented of drivers performance recent franchise continue us and $X.XX the time. diluted loss a will net result, to our charge-off the year per were of or commissions to of this closures; of the strategic liquidity due finance help lower in with factoring through

bills reserve the there also quarter. quarter, impact credit were allowance much in on losses, pockets the but was in We our factors, substantial to for strength our build these continued provision the the of also with first Despite slower.

Our bank average able points. unsecured a deposit excess to XXX notes discount. of costs declined XX we liquidity And at were to million use basis repurchase some by

leases commercial X% originations from last in market. Our March, and draws included well stronger new average on were defensive loans segments which up as the of quarter, as in results

Our strong. and remained liquidity positions capital

operating integration the Our plan acquisition efficiencies originally we is from anticipated. track greater are on recent and unlocking than

And many our how continued in uninterrupted remote a we're the remaining time want we're open model. proactively spend dynamic some current managing leveraging branches business the our risk period. credit in operations and Our we to with I on seeing running what strengths operations all environment. are this smoothly, our our in customer and through

that's variety very is commercial our exactly that to those have done business foremost, is to model segments across pivot this in operate and directly impacted market segments. And the current CIT's class are a advantage quickly, attractive expertise by more industry enables what exposure deep that manage First a pandemic. us and opportunities cycles, areas of environment. support We advantage diverse. across of tremendous take we've for and That asset

leader the continued tables. few business on in We five continued very which renewable for power in in we pandemic. North the renewables half. since demand third pipeline where of through megawatt ranking we the XX deals we power. the leader million this for $XXX no opportunities March, to first. facility for virtually another [indiscernible] the lead demonstrates of XXX were announced and the disruption CIT in Most a with league And focus deals me recently Carolina, The has the active second deal have solar a space, Let be closed is

activity transaction data media additional a strong seeing telecom as media and centers, guidelines telecom based streaming in supported well are in we production infrastructure, stay-at-home continued content cloud addition, division, the investment distribution. as have technology In and

Our borrowers investment deep to asset looking that had are We lending are half manage has their looking history the asset to yields grade as from capital good an applications started business, in long in is were for where area quarter we assets. with businesses class the to able this a finance expertise. fixed investment to several the record limits. borrowers also our based portfolios equipment were we operations. our larger were pipeline opportunistically a purchase expanding leverage banks and their quarter we this and finance grade business as CIT some class, opportunities in in on capabilities. to asset we able front, align see to began There and second to the the and volume small end toward as division near obligor certain return uptake capital And the see an of solid given

balance to capture risk. June have challenge originate were with they strengths a remained the year also manage us help seeing but volumes we In opportunities. of that a our qualities help I those this and our us business in environment, expertise many result, consistent allowed our agility, a us does Credit, in mentioned of As and sheet ago. open-up where are short, were opportunities course,

adapt arise. quickly knowledge they us when to expertise manage and Our size, issues proactively and industry allow asset class

As and by help resources reporting manage of the by began, portfolio as loan included redeployment industry that daily soon portfolio and portfolios That loan economic implemented are affected a review, to disruption. and we management pandemic monitoring most practices. the heightened

the loan each modification businesses the in program, our of recovery. underwriting in community branch XX,XXX to capital XXX finance larger totaling customers about estate and investment contracts real than about are relief a business commercial net $X granted path billion combined. And in and based the ticket there majority we ensure ticket smaller being have to loans with participated leases, was PPP program footprint. We We more and accessing across small

lending recently our clients. main also launched street We the mid-sized program for

assist disciplined to and through opportunities staying our period We this current customers new find possible. when are

commercial of out at us basis even and lower down This brought, our I is services want out These greater deposits acquisition remains the will Continuing points. and give was recent treasury for also is and and pandemic funding and bringing costs John, greater and Build the year Despite progress branch with touch payment this an track to at compliment the home it making great clients and the Mutual all to this channel Before deposits goals schedule the Omaha integration on lower owner and costs. for to pass products former and average deposit of ahead diversity. their a flexibility costs. our acquisition. is and existing efficiencies. key our the new is The and of of The great $X.X build Likewise, has are on some $X.X technology, to nicely channels driver up the team to deposits footprint. XX team direct complexity average integrated of progress bringing with Bank flexibility of deposits in association consumer funding of billion strategic channels additional team together to deposit teams, I X% billion. in XX% was the these progressing provide quarter on HOA hitting operating of the newly initiatives.

was to Bank the sell efforts, of of our Mutual wealth also integration that the agreement signed of offering. recently an part part business we product management As former Omaha

more it As CIT not transaction are a and of activities focusing small business, conducted the for determined very the strategy. of our that about review to we It's right it's and strategic a we areas was fit strength on our of aligned not model. divesting

We to provide close that additional coming in expect at time. will the the months we deal and detail

recent we a yet. time than to and the And realizing pandemic. through understand not as That about our continuously remains of through us a our are I economic deliver acquisition and ahead on years, CIT proven disruption culture this million has of XXXX the behind that schedule unlocking costs spirit As $XX We result, be anticipated. mentioned, year. faster this and performance the saves of improve. fortitude time we synergies we'll is In commitments have again

year available prudent on However, based of downturn we half to first the took best in of the anticipate this actions information. the impact the

what While we second today, level turn our for deteriorate of assuming profitability, year based macroeconomic on it and half not remains I'll further. a we the the of in are know the cautiously does to optimistic the dynamic environment ability modest environment to John. that, With restore

John Fawcett

Thank you, morning, good and Ellen, everyone.

per excluding noteworthy a cents we million items. loss per $X.XX $X.XX share, $XX and million share, loss GAAP of diluted or or reported As common mentioned, a net $XX of

quarter, but sectors business see interest the this have activity and June, Our rates continued began results where in we pandemic global reflect we capabilities. slowed in environment. the of many as the ongoing activity part the earlier current strong pickup to Overall low we manage through to in quarter

the in or were profitability implementation generate added forecasted XXXX. in fourth the or Assuming reflecting return environment. macro performance quarter, quarters COVID-XX we credit modest there to is substantial current significant no proactive earnings third environment to of and any appropriately positive our both of and reserves, of expect portfolio, the in Last expected we change CECL our and

a retail was million single provision in the of unique result elevated bolster of factoring to as reserves a circumstances quarters charge related store quarter, remained incurred loss lower to a and this continued The it related industry. closures. economic the customer While the was we $XX considerably in shutdown than and the to credit directly bankruptcy prior precipitous factoring

that we based industry, to the anticipate to Overall, which moderate another of we loss expect provision to in charges the factoring environment, reserved continue magnitude for fluid. quarter, our single forecasted subject remain not do additional obviously next customer our view in While of we business. conditions have macro on retail the

significantly finance our net by rates, rate LIBOR, market Our reduced yields. floating margin and revenue this lower which were primarily quarter loan impacted

XX by we channel, some XX rate pressure to interest primarily points approximately deposit we bank throughout strong higher actions in quarter, million cash, X% our basis earned it some tender our Fed. about online expense our due utilized margin of end. of excess Savings margin cash costs to the reducing at which this excess million a below for In to lowering addition, repurchasing gain at $X by $XXX reduced XX discount We We unsecured where by quarter have estimate basis annually. particularly million notes, basis as by of recognizing points Builder a offset our points $XX took the only to we at our levels and lowered our growth, deposit

retail rates benefits as basis LIBOR improvement we to has XX of third relatively point margin XX we believe to costs impacted and factoring a noninterest Assuming due quarters fourth over Other by remain commissions, deposit will the liquidity. to the store see our the excess constant, volumes was lower bottom reduced and closures. lower income course the and we quarter continue declined of as be realized this considerably

asset lower also We had gains on sales.

As we suspended.

XXXX volumes and Some of of activities. the in we approximately Factoring of retailers as been management our replenish at have July inventory. XX% half levels running improved portfolio first

factoring improvement. uncertainty that While back-to-school from and improve the we expect commissions to around season second the quarter temper levels, may volumes

seeing resume also existing renewed in conditions portfolio, of legacy to if and transaction our are to would a We continue opportunities mortgage consumer pools selling complete loans expect prevail. to

for to to efficiency. look our opportunities We operating improve continue

the expect of quarter, Bank related we cost costs, as to costs of reduction months. other already we related $XX million XX while the over Omaha million employee initiatives that took integration This terminations. and merger charge restructuring XX $XX the contract realize to million part and to a of was to $XX next primarily planned Mutual

excluding intangible realizing businesses billion, some This Omaha Mutual of our to $XX asset schedule. our items million are we two bank of year bring cost as amortization the to We our of reduction ahead integration synergies target, includes of operating noteworthy full XXXX by $X.XXX we expense as the XXXX of acceleration approximately lowering savings are cost together. and related

operating XX of continuous fourth We period update target our in focused actions are presentation, we to branches on will optimization $XX are has we to feet, remain accelerate I XXXX an and our quickly approximately expense provide which margin color to on or of XX% of clarity footprint, Bank plan we'll on finance the trends more responding gain rationalize the current to quarter additional environment. provide as estimated less. operating million with an payback our improvement by and Slide occupancy to including the total XXX,XXX allowed our result environment, and starting refer impairment former the us addition, footprint. some streamlining operating revenue In Mutual our on X in the earnings our Omaha to plans of charge of an expected and reduce We net These of square locations. now X. with office months to and our representing of

margin lower loan rates by basis in around primarily and declined margin the As rapidly About impacting finance rates XX% commercial verticals. interest mix XXX finance both downturn, LIBOR a by in a declined. Average net have floors. of of new sharp improvement loan by yields driven rate points this decline were And basis originations XX LIBOR many we rate higher have I revenue cash. mentioned, approximately floating getting to and on most commercial as XX the of XXX of points floors our quarter, since in points our our spreads in floating loans and seeing been industry market basis

negatively impacted by cash the our mentioned, basis margin higher points. I As mix of with XX rates lower coupled also

basis fleet of XX as American runoff. fleet deploy in the by car utilization oversupplied rates, as increased cars be liquidity economic Lower CDs we driven our of storage activity. higher expect term costs off-lease slowdown continues quarter. We rail reduced The as reverse storage the now some points North cost renewal general in the excess with rail to and well margin and industry this in XX% for to by

pricing and fleet our many in reduction the saw and types car While diverse economy, a representative new of leases. broader utilization is on

quarter, rail repricing loadings Our and quarter, XX% reflecting down up at cars, cars approximately least still have XXXX partial weighed recent weeks some that factories the grain although COVID-XX space to In this show to and indicators average below past the late basis XX% covered used activity renewal. particular, box from repriced starting E&P above quarter. are and XXX resumed conditions trough for on weeks heavily well sand plastic the over hoppers lease from production while recovery bars declined market this the current rail the cars certain rates. points improved pellet of renew as in continued mix Macro in And came renewables to in levels, real many levels. at few have utilization COVID-XX

commodity drift As prices and pricing expect improve. higher, to the economy starts we recover to and utilization rail

With still as macro quarters a to next capacity as lag online bit forecasted with rail down. cars Although leases storage, modest a assuming a and first. that be we lease brought reduction environment, from on will excess continue two reprice of yields background, in but net anticipate the the over

the mid into higher load more in cars, We fleet high utilization capacity rail demand XX% low to We expect space, the up quarters our end while to weigh of with used advantages, cars few on expected push and cars back the area recovery. the fracking, improve over believe XX% to by are for to area next continue diverse XXXX. our competitive sand the particularly E&P are resulting in young

we by lowering CDs low side deposit Savings online to we biggest liability we quarter decline our the rates and The our channel, across improved ending impact points by the We assets, where on points lower of quarter margin Builder non-maturity been On all have aggressively basis our XX offset our rate as lowered XX quarter repriced the costs. deposit the in was the in rates our in lowered X%. below channels. rate deposit basis

growth reached billion in and existing driven grew average lower HOA while channel cost deposit lower billion, commercial by was by costs. also XX by $X.X commercial deposit and points. ever HOA and about basis We both level The at further highest clients, declined to contributing its new about deposits deposits cost commercial $X

channels pace in As projections making HOA are with we realize to and we expanding Ellen are on channel. the progress remain pleased these indicated, the growth

CDs expect XX full quarters the over basis rate a realized lower commercial recent by deposit XX the of of as reductions the reduction HOA margin repricing, third of the indicated downward the points fourth course earlier, maturing will to growth and I we continued are along impact improve As cost channels. with and in

of liquidity while in X% more Average needs. we deposit by by draws for loans leases balancing look which leases increased rates division. this at provides defensive grew detail opportunities quarter, our and the on loans includes addition, business finance In end in continue to opportunities factoring commercial revolver invoices maturity reduce period of as factoring March, end impact lower where volume non average Slide XX last in level repaid. of sectors a are environment of quarter were and repayment the balances declined defensive outpaced we and the key to new volume current of prepayments. seeing the of new revolver will draws End --

we industry continue close equipment our workplace expertise. class leasing, leadership, reflecting as strong have strong in were the deals asset opportunities lending for While environment, current clients down and -- certain as are where origination and and well verticals to seeing we industry volumes

business and power opportunities and and by was key markets activity renewables media for driven technology, and in New capital verticals, commercial fees. included derivative finance such which telecom, as

environment indicated, lower pipelines to mentioned, we good based lending. reflecting just also and finance. increased in healthcare are the activity opportunities we down, As continue I the Overall Ellen finance than within see year, but business seeing current with last the slow in assets in equipment commercial are along areas capital

We other market. wider and improvements, spreads lenders In the market LIBOR are ticket exited seeing have paused structural business finance equipment is or floors also equipment new capital, including on as small share taking originations.

cautiously optimistic quarter earlier the seen volume capital activity a We third in for XXXX to industries. origination June remain customers. origination increase COVID-XX providing more focused applications, with in also pandemic, select In the business where which in demand back certain partner areas. Overall, higher business impacted we quarter we seeing small less in pulling pickup from as weeks financing to are while programs industries in in risk taking provide technology approach increased several the considerably are slowed past increased have to lending solutions, We had levels. manufacturers this in their a June by

work As provide qualifying our mentioned, we to Ellen economic upon payment COVID-XX. continue by deferrals by impacted events for the to customers customers with brought

of the the about with a granted As we to relief had requests carrying $XXX quarter, of consumer million. customers end value of X,XXX approximately

about consistent and $XXX requests early are customers. estate and contracts the our real are XXX business. deferrals is ticket but staying XXX the business capital, XX,XXX smaller close equipment our and as over our with $XXX granted another business in contracts administration expectations in finance, in approximately relief representing first transactions of finance with far for commercial also $X.X relatively still well over some We been It commercial just expiring, small across billion as as million so days we have trends million

As calling an middle financial a over example, calls ends. have requests expect to their deferral outbound them about not the be campaign the to we making in comprehensive of but customer X,XXX book, large deferrals continue our wave quarter, XX quarter, conducted yet, our the small and with second business forecasts. in touch market third to period as we borrowers In loan months begin deferral as a refining experienced solutions XX

activity of retail to million of X specific of and a reflecting the leases charge we our and customers on flat therefore bankruptcy and from precipitated originations retailers had million. loans prior not We three Apart this mentioned, we the our one some current single exposure credit have next bankruptcy. related of voluntary headwinds result are quarters on reducing increased the factoring and which had actively The onset of million a the end were was play closely the customer $XX monitoring and that Overall, trouble relatively loans we this were our risk on to COVID-XX. opportunities $XXX to provision. bankruptcy about prior The to facing a period factoring crisis, Slide trends did support impact strong to previously continue Net of charge-offs and significantly have been already XX sector to for, think to been our activity $XX direct X.XX% adjusted lower and be focus net $XX presentation. quarter, million highlights this retail shutdown, Slide a that unanticipated quarter as our additional charge-offs reserved provision. XX balances, and strengths. I second quarter provided on information which or will and average of

prior had were one the our did there the with exposures to this While of a or previously not those just the of we I number to exception quarter bankruptcy. we names to have exposure low exited reduced mentioned, retail or bankruptcies levels

industry monitoring and the We we expect and pressure contact the with developments customers closely and remain sector in our continued this in in are constant clients.

sector retail billion down Our by store outpaced is volume, driven have billion, $X.X by of considerably brought collections COVID-XX current factoring last new exposure in closures the factoring pandemic. $X.X quarter, from at as the the end on approximately

of $XXX terms In only April. June, extended the at addition, had from $XXX million down in end million receivables of

largest Our non-investment to exposure. million next exposures XX,XXX online of with retailers. retailers top million well-known that, of The being $XXX top are XX a approximately approximately A between well largest rated XX which very $XX million single is factored customers, which exposures to discount over five just The box remaining as the little grade comprise investment include are XX% customer accounts. across AA comprising retail total traditional under base as big are diversified the exposure grade. five $XX After and

July inventory so as I to As look restock far has depleted levels. been surprisingly retailers activity strong mentioned,

on we evaluated million credit and respect basis sheet of $XX $XXX evaluated risk monthly on price on quarter factoring closures That approval result a reserves, balance reserves seeing traffic and With remains said, robust strength to which a the implement and weekly this individually and framework place customer our and million exposures We’ve accounts increased review retailers. established a mitigation a sector we furniture where COVID-XX, for store and/or volume exposures. enhancements. increased to could our second monitoring appropriate We in and concern. discount continue are in collectively actions with also reduced by of wave to in reserves

provision the a scenario we to This provider baseline a that quarter. assumed the in March credit in more had determine well-known utilized industry used recovery that V-shaped than recession longer we our baseline quarter, first from the June the and scenarios

in include as and to other We that uncertainty as to segments, such model also ticket assumptions portfolio risk additional loans. or at qualitative to macro uncertainty, changes sensitivity factoring small as for industries and commercial gas specific factors well overlay apply oil

As for coverage basis X.X% and total XX loans to increased XX loans. a commercial points result, on points approximately basis our ratio to banking X.X%

provision significant next Nonaccrual continue finance increased driven real no the quarter, the moderate in estate to expect quarter. to in loans by Assuming change commercial finance. significantly outlook, and in we the primarily loans

place Ellen indicated, specific finance, put commercial review, rail, to in As delinquencies. identified industry indicators most we higher monitoring watch and of performed by have and have trends we loan heightened conducted In carefully real prioritized loan risk estate stress exposures, finance vulnerable and analyses a accounts. our

We vulnerable basis. revolver a requests monitoring borrowers on and borrower relief daily are for advances

our adjusted also reflect environment. have to the current We underwriting

are a individually finance request in path the transaction to ensure modification underwriting, has real to and and finance rail We for recovery. estate each borrower commercial

We the have areas acute most underwriting of our and in restricted distressed risk. suspended decisioning industries in auto

while continuing staying disciplined our evaluate opportunities and most efficiently. structures, utilize that We capital our to pricing in are

XX appendix information at for We be the of have more environment. our our updated slides portions to liquidity impacted Slide on the current by additional end. in position quarter expected highlights portfolio our

liquidity Our bank and robust both company. at bank holding the remains the

bank for at loan XXXX [ph]. for coupon March our is liquidity. we with of Omaha substantially borrowing next million increasing of sources and $XXX we unsecured bank, contingent of a our our Mutual same increased at not it's just and the home with the assets bank holding of acquired federal the X.XXX% amount At Bank, the capacity until of the X.XX issued During debt available company, at the quarter, maturity

Tier in end federal the Turning cash loans, The strong ratio XX%, XX levels, lower well the X risk and PPP conservation remain to decline and points to this ratio risk advanced quarter of including loans buffer. our Slide reserves driven weightings shift in at zero. common in of capital in excess the mix including XX, equity weighted which by the the and assets, the basis growth quarter have was period of minimum a

of expect improves, recover weighted increase to lower deployment starts liquidity to economy risk the activity business the assets loans. and we level of As a from excess and PPP

positive earnings the expect of capital. deployment also We offset will

quarters, to Ellen. lower forecasted weighted the Over mix turn will expect -- assets. XX% to it X.X% with remain levels at back over macro two risk next we the environment, on range, X common And the current equity to assuming of in our that, depending I the

Ellen Alemany

John. Thanks,

your a have With we're are questions. over into agile and team first happy the As us to allowance been risks. us seasoned, deposit is transform as to is actively I've for and reserve environment. credit appropriate strong work optimistic, but diverse period. business established resilient. company costs the that, cautiously CIT and The manage ever mentioned the us, half the take years last strengthened We navigate and declining. management to considerable also it's has are in The tested changing path mindful increase best and we losses before, our our is we few second to adaptable. And done heading positioned this this as that The is rapidly a

Operator

go comes Orenbuch Instructions] from Moshe with Thank first Please [Operator Today's ahead. question you. Suisse. Credit

Moshe Orenbuch

in surprised guess, in little about basis made talked talk income dollars margin. bit net a costs, net in the what trends the bigger. I finance you Great. Thanks. John, in interest recovery you given Thanks. might it we XX I'm Could just terms margin dollars? the see deposit in XX cuts you revenue in in QX that in about or and to the had points isn't of

John Fawcett

Yes.

cutting Moshe, it's to a the have began. think -- when I important on perspective So,

were quarter, in had be in because the bit, and water think would our significant second toe April we across about put concerned amount very early we some little a the I so cuts And attrition. of we very minor

that, realized further And of non a we quarter, that which growth XX in the in we've the bank across a XX XX the actually online basis XX interesting. is gone reduced whole. rates weeks is built further, kind actually across strategies we've all of portfolio cuts out consistent and weeks, actually taking As lot points in maturity across and we the had

through go to through, quarter opportunity quarter, that say that the think of the that we we your channels. done answer third expect terms question, the beyond. all space. of that board, there we'll would -- across pretty I second in to is, drag non-maturity So deposit we've what of the continue in Separately, we the the is terms a did into in think a lot we'll of to deposit continued play actually down I kind that even cuts of good we benefits job But is in that further, pricing especially and

question challenging. broader around terms pretty the In was of interest second net quarter income, the

for the was, us. of coming some my think see volumes I bottom talked we shoots come clearly We're terms kind And of about green capital out the back online. just of I business I it to in -- script, starting business June capital, think in the through were say, business XX% the what were volumes at hit XXXX. want what to days done last factoring first quarter of of in year. they actually July, down which Business XX factoring of in first, it had was XX% shoots

XX% thinking the we Our get business are guys origination the of expect volumes. that to notwithstanding of impact second quarter capital now

terms And our capital. And these growing the business used of essentially are fastest feels and so And business equipment it's in transitioning. like phone imaging systems. technology its business in

it the of to liquidity business the out will deposits, on repriced that may some rates to with hopefully lower think cliffs of CDs reinflate, some as runway more some and at consume substantially said, time liquidity. And that are deposit be the the there that will push same know lead I we in starts we excess I runoffs. excess As think some down also

the fluid. quarter, -- are levels of you terms returns not modest of of these we've as to said, in are terms what I'm In in it's fourth third of expectations incredibly profitability. amounts dollar going and And obviously give

last going to finance and interest net income I in around margin obviously think driver the is the net be rail.

And started some shoots to that's and But we've rail in of whacked coming again, in so up. to it terms we've started see actually July, green good the second pretty rail quarter. seen into June in and what loadings got in go

see increase renewal of rates, to down the continue utilization freight hopefully switching around capacity utilization We've of excess I that until expect we so seen renewal larger And forecasting still rates, notwithstanding that costs. terms worst crawl we XX% well, North we're will the the in utilized. be think American fact some up. will And storage to and

Moshe Orenbuch

if take different could a this I slightly maybe from just angle. So

PPNR, maybe million guess, the so that fee side third had confident $XXX things will are was million quarter that income be the quarter, you first the benefit expenses. would in and from $XXX fourth down to the number quarter, the or mean, $XXX I about higher in talked on that I about this in quarter? you of You million some

John Fawcett

seeing confident. now, Yes, fluid I I based these are we're on look, times. what very am mean,

quarter at so to feel that is And nanosecond, pretty confident third going I better. this the be

little ramp you diminished up. As to a and slightly 'XX. I look start what sales income, Rail of factoring were in said, we're as of at forecast kind back bit was of second volumes off seeing non-interest the quarter our

had pricing the We quarter. second just portfolio dislocation expect some the We suspended consumer as we'll distressed in we're mortgage be and sellers. not of market normalizes. The collapsed sales that in on 'XX completely completely legacy

should and accretion. I the our footprint heads And expenses. think think we're fees, another related to to took pause. hold quarter, by and the is we the will of just of into but in, gain and market I on sized release very We'd to we Reducing comes transition activity in starts with the disposition the as didn't What over double only on quarter, expenses, that will capital gross expect so markets Securities that of the the trend body third advance. will all then portfolio, focused. not continue out LCM probably taking we that see and a see to gains also kind second the purchase And provision we're a sale. XX% account

we And are so …

Ellen Alemany

had of another is $XX to certain April this come say June. lender the business in technology to in in significantly and of expenses mostly it's in next Omaha started from in And million June very capital, finance year Bank June Mutual we we volumes increased it's industry related, And accelerated year. activity year. would business overall really verticals. as last that’s we slow, but I June see would May say capital. and same in I were had we business in And commercial, supposed out up

we from for we're We've we've trade oil, bounce some we're U.S.-China some impact think order. recently. agreement, niches crude products. in So trial large activity rail, like housing other really to had China And demand is seen refined these X right industry the in that corn trade -- of in order seen we really from positioned largest mentioned, also well as think lumber seeing think in renewed rail the And John driving with rail. And we markets going agreement Phase now. one products. the is Basically activity the We rail.

some seeing there. we're So activity

Moshe Orenbuch

much. Great. Thanks very

Operator

And today Citi. go Cyganovich comes with Please Arren question next our from ahead.

Arren Cyganovich

of cash, net deploy do cash finance think will I said And, you around excess the XX is in The points. think I much you you quarters? coming how basis improvement of Thanks. to incorporated expect that guess, XX XX over depressed I the basis -- from mentioned to How that margin, was points?

John Fawcett

product the as two dynamics, these pricing are Well, on some I the okay. And continue hopefully, attrite. expect things to think deposit deposits to principle we Arren, that that you one that's see would reduce is

other I terms across that actually quarter. in got the coming some deposit high we've thing the that cliffs think third CDs is, are fairly of is

would could of be attrite. work some as we're the growth best we re put is seeing will in that actually balance so re-inflate. the to What And of kind on deposits sheet we that if

this and over all it five whole deposit at exit course of deposits, 'XX interesting actually financial and delayed the And search cash, of investments, equities last crisis I what it quality, like 'XX, you kind looked that thing the the time market money is of happened, the ran activity hoarding funds, think or guess, 'XX. the phenomenon during the is, which happened I about four years. they its that of now call if

so, the something And could not trapped us, that be banks but sheet. for continues we're to long a hypothetically, all cash as balance time, on just this be with living

last about one's think financial was real bacterial. what's The this one is this different a financial crisis I crisis.

And so it sheet. to But liquidity balance it's anyone's start the as will moderate, long billion vaccines a of and And it we cash to start as now little take. right but expectation is with to bit excess to live how we're guess on the maybe $X and with $X will sitting different. it will this, billion be

aggressive be think multi-quarter issue and for terms rates, care the lowering be I that some of will will of problem. We take of our in But might a sure. it

Arren Cyganovich

then just, a then, estate other of I deferral the only some of there's example, real guess, And numbers surprised I total And X% other are think of -- Okay. payment I some statistics versus with finance, moving on concurrent the that deferral as have I've side, NPA that rising, seen you come bit strategy? that little are low, for the frankly, in the a banks. to is the compared dire in I'm NPA is situations from the is can't situations are just a those with stuff what seem And deferral? even you what to plan to a from guess, to where so that up the where able getting deferral be it

Ellen Alemany

that? on comment to want you Marisa,

Marisa Harney

Yes.

there. questions were think I three in there

we deferrals. anecdotal would were them. from say can to The know don't others. I've low see cautious deferral, if me with we how are had we get Let different I feedback, some I of but an approach granting pretty and level took early I

for a chose do have to a XXX can subsequent deferral with XX-day a deferral XX you example, We For upon up days days. to further information.

the to The structures to of in book borrowers. of those and private is in support many due support And -- continues commercial the might particularly lot finance estate a have pandemic. true has liquidity a real a in to company have to this sponsor equity also that We be cases, operation it. although stressed

rather try a not And took therefore in that more grant due particular more we disruption with solve was liquidity. pandemic. situations, down the that -- in real is business, NPAs, some so tends finance, has if to was to those true in and be to sponsorship had estate deferral behind to a well-healed a respect to that but to it. an chose institutional to we or in deferral or which approach it shut significant automatically to With And push press book the the operation investors

was that be say business a and a However, not that would be credit whatever whenever particularly the might to felt that result wherever term, that better of is, as lack for - that you we period to being would was normal, and that normally would where going recovery handle distressed. its we that in particular extended -- restored handle

our has hospitality areas for airlines, those and And quarter, it. So, for closed, NPAs. -- the drove passenger recovery two industry true also long those hospitality cases for example, ahead NPAs that a the a if is property we feel are those this in in of that That's example. increase

Arren Cyganovich

you. Thank Okay.

Marisa Harney

Sure.

Operator

from Vincent Instructions] Please Stephens. comes Caintic [Operator question next go Today's ahead. with

Vincent Caintic

morning. Hey, thanks. questions. Good Two

just one, you're First how the one a thinking quick on about dividend.

but thinking two just strong, levels been if are your that has past the So given your dividend the capital wondering have remained quarters. changes there I'm any about level, to low coverage with EPS

John Fawcett

it's think quarter-to-quarter a I exercise.

conversation a at have we obviously it's Board. our think I

in a that obviously it's good think My regulatory with we I that conversation have our we're is view place. partners. a

Mutual the took of I profitability, We've horses fairly maintained the impact feels significant believe and quarter out we extent share think that first that transaction Bank of in for dividend of X we've lumps is common of repurchases. in well been equity points. that like ahead augmented kind quarter. Omaha We've our the returning very the this and a level done barn. the you in quarter are second amount the about To of on that X reserving good Tier the ratio modest basis payout suspended The stewards modest to first we're about of capital. always transaction, think of it When we ratio.

on our dividends governs actually ability conversation was it Fed ACL. is you the to and if ample actually notion company, which XXXX is principal been first and And the We half on incurred at get at to which embedded in bank. the crystal the has driver have of when 'XX, ample a financial loss transfer pay capital performance about, ball the liquidity losses to holding from essentially And the 'XX, CECL. about the provisioning, to talk in relied GAAP of written liquidity absorbency wonky want the less of we

in misalignment GAAP, between and recognition fundamental loss regulation way. of accelerated almost supervision kind guidance spontaneous which a very an So there's in XXXX established

last maintained we've capital buffers of And very and And capital said above a a challenge. are points our conservation couple it planning is, so the that's robust and and guess you ratios strong I process. capital

planning. the the a So with notwithstanding long We’ve why continued not fact pretty we're relaxed But all standards bathwater. those protocols. no SIFI. of and longer with bank, It's that maintained capital regulators ever that throughout we're saying CCAR capital that were. to of the and fact our think we've we've heightened we understand I'm in appreciate around sure babies it. the operate I'm I been a not very way And winded

Vincent Caintic

very great. It's helpful. Okay,

Second question.

baseline on So is for commentary assumptions positive V-shaped commentary June your -- and your very you had recovery.

Thank any just you've Just from had you. in what a wondering what maybe been letup updates or some maybe the if of about if any news state from wave second shutting from July here? updates so we're seeing you're kind seeing down? any there's Just far,

Ellen Alemany

anything activity June comment terms pockets? And side, businesses if you’ve credit and volume of in and that business very, you just the The we was reviews on reported the Yes. activity of do monthly with current. Marissa, can most very seen it's

Marisa Harney

obviously, a the the economy closely. Again, to shocked Clearly wholesale we’re it's politically see the just expedient. by I nationwide think end In watching mean, I of No. don’t March, at shutdown. a think situation going complete my was shutdown. opinion, Yes. don't very I we're

still that typically meaning particular kind July. credit clearly the However, up month anything significant Probably, in tell to as retailing who of And business local pretty some pick see in just seeing changed factoring where between in different or in are whether the the beginning -- of going seeing on show involuntary, shutdowns we’re is the or pulse are and people stresses. single to No, of of it's strong in that’s But up too of a factoring markets. variety month wholesalers obviously at don’t opened. manufacturers, we’re markets don’t has orders July. June experiencing are bigger see I our volume clients soon the ordered

Vincent Caintic

you much. very Okay. Thank

Operator

management for And question-and-answer ladies the like the I session. to conference would turn concludes the over any and back this team to gentlemen, … final

Ellen Alemany

and Great. Rocco, for thank morning. this joining Thank everyone, you, you,

Relations. contact the If you please feel free any Investor have follow-up to questions,

You information along information can for on great at day. and your contact other have cit.com. a find time CIT Thank you again with our

Operator

you. today’s This thank conference presentation. all Thank for attending you call. concludes today’s We

and now lines a have your may day. You disconnect wonderful

Cit (CIT) 21 Jul 202020 Q2 Earnings call transcript