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CIT Group (CIT) Q3 Earnings Meet Estimates, Revenues Down Y/Y

Zacks Equity Research

CIT Group Inc.’s CIT third-quarter 2019 adjusted earnings from continuing operations of $1.29 per share were in line with the Zacks Consensus Estimate. The figure compares favorably with the prior-year quarter’s adjusted earnings from continuing operations of $1.15.

Results benefited from a decline in provisions. Moreover, the balance sheet position remained strong. However, rise in expenses along with lower revenues hurt results to quite an extent. Probably because of these negatives, shares of the company lost nearly 3.5%, following the release.

Net income available to common shareholders (GAAP basis) was $142.8 million or $1.50 per share, up from $131.5 million or $1.15 per share in the prior-year quarter.

Revenues Decline, Expenses Rise

Total net revenues (non-GAAP) were $454.3 million, down 4.5% year over year. Moreover, the figure lagged the Zacks Consensus Estimate of $469 million.

Net interest revenues were $259.5 million, down marginally year over year.

Total non-interest income was $312.7 million, decreasing 10.8% from the year-ago quarter.

Net finance margin contracted 37 basis points to 3.06%.

Operating expenses (excluding noteworthy items and intangible asset amortization) were $261 million, up 1.6% from the prior-year quarter.

Credit Quality Improves

Provision for credit losses was $26.6 million, down 30.2% from the year-ago quarter. Also, non-accrual loans declined 6.3% to $298 million.

Net charge-offs were $26 million, on par with the prior-year quarter.

Balance Sheet Strong, Capital Ratios Worsen

As of Sep 30, 2019, interest bearing cash and investment securities amounted to $9.1 billion, comprising $1.4 billion in interest bearing cash, and $7.7 billion in investment securities and securities purchased under the agreement to resell.

As of Sep 30, 2019, Common Equity Tier 1 and Total Capital ratios (as calculated under the fully phased-in Regulatory Capital Rules) were 11.6% and 14.3%, respectively, down from 12.4% and 15.1% in the prior-year quarter end.

Share Repurchase Update

During the reported quarter, CIT Group repurchased $341 million worth of shares.

Our Viewpoint

CIT Group’s business streamlining initiatives, and rise in demand for financing of inventories and capital equipment will likely continue to support profitability. However, worsening credit quality is a major near-term concern. Moreover, rising expenses due to continued investments in franchise will likely hurt bottom-line growth in the near term.

CIT Group Inc. Price, Consensus and EPS Surprise
 

CIT Group Inc. Price, Consensus and EPS Surprise

CIT Group Inc. price-consensus-eps-surprise-chart | CIT Group Inc. Quote

Currently, CIT Group carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Finance Stocks

Washington Federal’s WAFD fourth-quarter fiscal 2019 (ended Sep 30) earnings of 66 cents per share were in line with the Zacks Consensus Estimate. The figure reflected year-over-year growth of 6.5%.

Hancock Whitney Corporation’s HWC third-quarter 2019 adjusted earnings per share of $1.03 surpassed the Zacks Consensus Estimate of $1.01. The bottom line was 2% higher than the year-ago figure.

Ally Financial Inc’s ALLY third-quarter 2019 adjusted earnings of $1.01 per share surpassed the Zacks Consensus Estimate of 98 cents. The bottom line was 11% higher than the year-ago quarter figure.

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