CIT Group reported Q2/13 net income of $184 million compared to a net loss of $73 million in Q2/12. Net income for the six month period ended June 30, 2013 was $346 million compared to a net loss of $500 million. CIT said prior year results include significant debt redemption charges.
“Our financial results this quarter demonstrate the progress we have made in building our franchise and meeting our profitability targets,” said John Thain, chairman and chief executive officer. “We grew CIT Bank assets and deposits and advanced our expense reduction initiatives as we continued to provide financing to our small business, middle market and transportation clients. The termination of the Written Agreement and our announced share repurchase plan were important milestones that enhance our ability to create value for our shareholders.”
CIT said second quarter results reflect growth in earning assets, lower funding costs, and continued strong portfolio performance. In addition to the absence of significant debt redemption charges in the current quarter, the improvement in net income from the year-ago quarter reflected lower funding costs and asset growth, partially offset by reduced gains on asset sales and lower net FSA accretion.
The following commentary on Corporate Finance and Trade Finance was excerpted from the new release:
Pre-tax earnings for the quarter were $41 million. Excluding the impact of debt redemptions, pre-tax earnings were $43 million, down from $90 million in the year-ago quarter, as lower counterparty receivable accretion and gains on asset and investment sales more than offset lower funding costs, and up from $28 million last quarter reflecting higher capital market fees and lower credit and operating costs. Gains on asset and investment sales totaled $2 million in the current quarter, down from $15 million in the prior-year quarter and $8 million in the prior quarter.
Financing and leasing assets grew to $9.4 billion, up $0.2 billion from March 31, 2013 and $1.7 billion from June 30, 2012, reflecting a portfolio purchased during the first quarter of 2013. New funded loan volume totaled $1.3 billion, up from $969 million in the year-ago quarter and $960 million in the prior quarter.
Pre-tax earnings for the quarter were $13 million. Excluding the impact of debt redemptions, pre-tax earnings were $14 million, compared to $12 million in the year-ago quarter, and $10 million in the prior quarter. Factoring volume was $6 billion, up 1% from the year-ago quarter, and down 6% sequentially due in part to seasonality. Factoring commissions of $29 million were essentially flat with both the year-ago and prior quarters.
Credit metrics remained favorable. Non-accrual balances of $3 million declined significantly from $48 million a year ago and modestly from March 31, 2013, primarily due to accounts returning to accrual status and reductions in exposures. There was a modest net recovery in each of the current and prior quarters, compared to a small net charge-off in the year-ago quarter.
To read the entire CIT Group news release, click here.