CIT Group Inc. (CIT: Quote) on Monday reported a loss for the second quarter that widened from last year on higher debt refinancing charges and lower interest income. However, the financial provider to small businesses and middle market companies said it continued to see an improvement in its credit quality during the quarter.
CIT also continued to see a reduction in borrowing costs, redeeming or repurchasing about $4.2 billion of high cost debt in the quarter.
John Thain, chairman and chief executive officer of CIT Group said, "Our results this quarter, while impacted by the repayment of high cost debt, reflect our efforts to grow our businesses as we meet the financing needs of our small business and middle market clients."
Thain added, "CIT Bank reached two significant milestones - $2 billion of internet deposits and $10 billion of assets - and will continue to play an important role in our growth strategy."
Total interest income for the quarter declined 32 percent from the year-ago period to $409.3 million.
The company's provision for credit losses declined to $8.9 million from $84.1 million in the year-ago quarter, reflecting lower charge-offs and a reduction in non-specific reserves.
CIT, which emerged from bankruptcy in December 2009, said its funded new business volume grew 38 percent to $2.4 billion in the quarter. Meanwhile, committed new business volume grew 31 percent to $2.7 billion, with improvements in corporate finance, vendor finance and transportation finance.
Commercial financing and leasing assets increased from prior periods to $29 billion, while the company further reduced consumer assets primarily through the sale of $1.1 billion of student loans.
The lender's second-quarter net loss widened to $70.7 million or $0.35 per share from $49.7 million or $0.25 per share in the prior-year period.
On average, 15 analysts polled by Thomson Reuters expected the company to report loss per share of $0.57 for the quarter. Analysts' estimates typically exclude one-time items.
The latest quarter's results include debt refinancing charges of $286 million related to the prepayment of $4.2 billion of high cost debt. This compares to debt refinancing charges of $163 million in the year-ago period for the prepayment of $2.5 billion of high cost debt.
Excluding debt refinancing charges, pre-tax income for the quarter rose to $245 million from $134 million in the same period last year.
Net interest revenue for the quarter was a negative $229.9 million, compared to negative $206.8 million in the same period last year. Analysts had a consensus revenue estimate of $274.28 million.
As at June 30, 2012, CIT's total assets were $42.8 billion, down from $48.2 billion at the end of the year-ago quarter.
CIT closed Friday's trading at $34.79, up $0.59 on a volume of 2.17 million shares.
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by RTT Staff Writer
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