CIT Seeking to Acquire Bank Deposits
At its first investor day conference since 2006, CIT chairman and chief executive, John Thain, said that the area “most interesting to us” for acquisitions is the opportunity to acquire bank deposits. “That’s really the place that we see the most interesting opportunities,” Thain said, adding his company “will continue to look to acquire deposits.”
CIT traditionally relied on issuing debt to fund its loans and other financing. Since then, the company has moved several of its lending platforms from its holding company to its bank subsidiary, allowing it to tap deposits as a funding source.
Commenting on its significantly improved funding profile, CIT executives noted that its weighted average cost of funds has improved from 5.97% in 2009 to less than 4.00% through the first quarter and, on a pro-forma 2012 basis, is expected to be about 3.93%. CIT said its marginal funding cost has continued to improve as bank deposits now represent 22% of current fundings with a long-term target of 35-45%. In a slide presentation, CIT showed that the weighted average interest rate on new financings from deposits has declined to 1.20% 2012 year-to-date from 1.89% in 2011.
To view presentation materials from the CIT Investor Day conference, click here.
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