Washington, D.C. 20549
|X| Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2016 |
| | Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 |
Delaware
(State or other jurisdiction of incorporation or organization) |
65-1051192
(IRS Employer Identification Number) |
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|
|
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11 West 42nd
Street New York, New York
(Address of Registrants principal executive offices) |
10036
(Zip Code) |
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|
|
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(212)
461-5200
(Registrants telephone number) |
Item
1.
|
2 | |||||||
|
2 | |||||||
|
3 | |||||||
|
4 | |||||||
|
5 | |||||||
|
6 | |||||||
|
7 | |||||||
Item
2.
|
70 | |||||||
|
and
|
|||||||
Item
3.
|
70 | |||||||
Item
4.
|
131 | |||||||
Item
1.
|
133 | |||||||
Item
1A.
|
133 | |||||||
Item
2.
|
133 | |||||||
Item
4.
|
133 | |||||||
Item
6.
|
134 | |||||||
139 |
CIT GROUP INC. AND SUBSIDIARIES
September 30,
2016 |
December 31,
2015 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Assets
|
||||||||||
Cash and due
from banks, including restricted balances of $239.2 and $601.4 at September 30, 2016 and December 31, 2015
(1)
, respectively (see Note
8 for amounts pledged)
|
$ | 920.5 | $ | 1,481.2 | ||||||
Interest
bearing deposits, including restricted balances of $614.1 and $229.5 at September 30, 2016 and December 31, 2015
(1)
, respectively
(see Note 8 for amounts pledged)
|
6,513.1 | 6,820.3 | ||||||||
Investment
securities, including securities carried at fair value with changes recorded in net income of $301.3 and $339.7 at September 30, 2016 and December 31,
2015, respectively (see Note 8 for amounts pledged)
|
3,592.4 | 2,953.8 | ||||||||
Assets held
for sale
(1)
|
2,462.1 | 2,092.4 | ||||||||
Loans (see
Note 8 for amounts pledged)
|
29,918.2 | 31,671.7 | ||||||||
Allowance for
loan losses
|
(421.7 | ) | (360.2 | ) | ||||||
Total loans,
net of allowance for loan losses
(1)
|
29,496.5 | 31,311.5 | ||||||||
Operating
lease equipment, net (see Note 8 for amounts pledged)
(1)
|
16,954.8 | 16,617.0 | ||||||||
Indemnification assets
|
362.2 | 414.8 | ||||||||
Unsecured
counterparty receivable
|
560.2 | 537.8 | ||||||||
Goodwill
|
1,170.5 | 1,198.3 | ||||||||
Intangible
assets
|
161.3 | 176.3 | ||||||||
Other assets,
including $174.3 and $195.9 at September 30, 2016 and December 31, 2015, respectively, at fair value
|
3,319.0 | 3,297.6 | ||||||||
Assets of
discontinued operations
|
452.9 | 500.5 | ||||||||
Total
Assets
|
$ | 65,965.5 | $ | 67,401.5 | ||||||
Liabilities
|
||||||||||
Deposits
|
$ | 32,854.3 | $ | 32,782.2 | ||||||
Credit
balances of factoring clients
|
1,228.9 | 1,344.0 | ||||||||
Other
liabilities, including $263.7 and $221.3 at September 30, 2016 and December 31, 2015, respectively, at fair value
|
3,168.3 | 3,158.7 | ||||||||
Borrowings,
including $3,977.3 and $3,361.2 contractually due within twelve months at September 30, 2016 and December 31, 2015, respectively
|
16,548.7 | 18,441.8 | ||||||||
Liabilities of
discontinued operations
|
927.8 | 696.2 | ||||||||
Total
Liabilities
|
54,728.0 | 56,422.9 | ||||||||
Stockholders Equity
|
||||||||||
Common stock:
$0.01 par value, 600,000,000 authorized
|
||||||||||
Issued:
206,140,114 and 204,447,769 at September 30, 2016 and December 31, 2015, respectively
|
2.1 | 2.0 | ||||||||
Outstanding:
202,047,304 and 201,021,508 at September 30, 2016 and December 31, 2015, respectively
|
||||||||||
Paid-in
capital
|
8,758.2 | 8,718.1 | ||||||||
Retained
earnings
|
2,758.9 | 2,557.4 | ||||||||
Accumulated
other comprehensive loss
|
(104.2 | ) | (142.1 | ) | ||||||
Treasury
stock: 4,092,810 and 3,426,261 shares at September 30, 2016 and December 31, 2015 at cost, respectively
|
(178.0 | ) | (157.3 | ) | ||||||
Total
Common Stockholders Equity
|
11,237.0 | 10,978.1 | ||||||||
Noncontrolling
minority interests
|
0.5 | 0.5 | ||||||||
Total
Equity
|
11,237.5 | 10,978.6 | ||||||||
Total
Liabilities and Equity
|
$ | 65,965.5 | $ | 67,401.5 |
(1)
|
The following table presents information on assets and liabilities related to Variable Interest Entities (VIEs) that are consolidated by the Company. The difference between VIE total assets and total liabilities represents the Companys interests in those entities, which were eliminated in consolidation. The assets of the consolidated VIEs will be used to settle the liabilities of those entities and, except for the Companys interest in the VIEs, are not available to the creditors of CIT or any affiliates of CIT. |
Assets
|
|||||||||||
Cash and
interest bearing deposits, restricted
|
$ | 267.9 | $ | 314.2 | |||||||
Assets held for
sale
|
| 279.7 | |||||||||
Total loans,
net of allowance for loan losses
|
2,061.9 | 2,218.6 | |||||||||
Operating lease
equipment, net
|
3,723.6 | 3,985.9 | |||||||||
Other
|
| 11.2 | |||||||||
Total
Assets
|
$ | 6,053.4 | $ | 6,809.6 | |||||||
Liabilities
|
|||||||||||
Beneficial
interests issued by consolidated VIEs (classified as long-term borrowings)
|
$ | 3,061.2 | $ | 4,084.8 | |||||||
Total
Liabilities
|
$ | 3,061.2 | $ | 4,084.8 |
CIT GROUP INC. AND SUBSIDIARIES
Quarters Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2016
|
2015
|
2016
|
2015
|
|||||||||||||||
Interest
income
|
||||||||||||||||||
Interest and
fees on loans
|
$ | 457.6 | $ | 414.2 | $ | 1,385.7 | $ | 961.4 | ||||||||||
Other
interest and dividends
|
32.5 | 23.5 | 95.1 | 41.1 | ||||||||||||||
Interest
income
|
490.1 | 437.7 | 1,480.8 | 1,002.5 | ||||||||||||||
Interest
expense
|
||||||||||||||||||
Interest on
borrowings
|
(180.0 | ) | (190.6 | ) | (550.0 | ) | (585.9 | ) | ||||||||||
Interest on
deposits
|
(99.4 | ) | (89.7 | ) | (298.3 | ) | (230.9 | ) | ||||||||||
Interest
expense
|
(279.4 | ) | (280.3 | ) | (848.3 | ) | (816.8 | ) | ||||||||||
Net interest
revenue
|
210.7 | 157.4 | 632.5 | 185.7 | ||||||||||||||
Provision for
credit losses
|
(46.2 | ) | (49.9 | ) | (173.6 | ) | (102.9 | ) | ||||||||||
Net interest
revenue, after credit provision
|
164.5 | 107.5 | 458.9 | 82.8 | ||||||||||||||
Non-interest
income
|
||||||||||||||||||
Rental income
on operating leases
|
563.6 | 539.3 | 1,708.3 | 1,601.6 | ||||||||||||||
Other
income
|
73.9 | 39.2 | 279.1 | 189.1 | ||||||||||||||
Total
non-interest income
|
637.5 | 578.5 | 1,987.4 | 1,790.7 | ||||||||||||||
Total
revenue, net of interest expense and credit provision
|
802.0 | 686.0 | 2,446.3 | 1,873.5 | ||||||||||||||
Non-interest
expenses
|
||||||||||||||||||
Depreciation
on operating lease equipment
|
(179.1 | ) | (159.1 | ) | (530.8 | ) | (473.7 | ) | ||||||||||
Maintenance
and other operating lease expenses
|
(60.4 | ) | (55.9 | ) | (181.5 | ) | (151.4 | ) | ||||||||||
Operating
expenses
|
(332.0 | ) | (333.9 | ) | (1,018.0 | ) | (810.5 | ) | ||||||||||
Loss on debt
extinguishment and deposit redemption
|
(5.1 | ) | (0.3 | ) | (10.8 | ) | (0.4 | ) | ||||||||||
Total
non-interest expenses
|
(576.6 | ) | (549.2 | ) | (1,741.1 | ) | (1,436.0 | ) | ||||||||||
Income from
continuing operations before provision for income taxes
|
225.4 | 136.8 | 705.2 | 437.5 | ||||||||||||||
(Provision)
benefit for income taxes
|
(77.0 | ) | 560.0 | (224.0 | ) | 478.2 | ||||||||||||
Income from
continuing operations, before attribution of noncontrolling interests
|
148.4 | 696.8 | 481.2 | 915.7 | ||||||||||||||
Loss
attributable to noncontrolling interests, after tax
|
| | | 0.1 | ||||||||||||||
Income from
continuing operations
|
148.4 | 696.8 | 481.2 | 915.8 | ||||||||||||||
Discontinued
Operations
|
||||||||||||||||||
Loss from
discontinued operation, net of taxes
|
(15.6 | ) | (3.7 | ) | (187.4 | ) | (3.7 | ) | ||||||||||
Total loss
from discontinued operations, net of tax
|
(15.6 | ) | (3.7 | ) | (187.4 | ) | (3.7 | ) | ||||||||||
Net
Income
|
$ | 132.8 | $ | 693.1 | $ | 293.8 | $ | 912.1 | ||||||||||
Basic income
per common share
|
||||||||||||||||||
Income from
continuing operations
|
$ | 0.74 | $ | 3.66 | $ | 2.39 | $ | 5.08 | ||||||||||
Loss from
discontinued operation
|
(0.08 | ) | (0.02 | ) | (0.93 | ) | (0.02 | ) | ||||||||||
Basic income
per share
|
$ | 0.66 | $ | 3.64 | $ | 1.46 | $ | 5.06 | ||||||||||
Diluted
income per common share
|
||||||||||||||||||
Income from
continuing operations
|
$ | 0.73 | $ | 3.63 | $ | 2.38 | $ | 5.05 | ||||||||||
Loss from
discontinued operation
|
(0.08 | ) | (0.02 | ) | (0.93 | ) | (0.02 | ) | ||||||||||
Diluted
income per share
|
$ | 0.65 | $ | 3.61 | $ | 1.45 | $ | 5.03 | ||||||||||
Average
number of common shares (thousands)
|
||||||||||||||||||
Basic
|
202,036 | 190,557 | 201,775 | 180,300 | ||||||||||||||
Diluted
|
202,755 | 191,803 | 202,388 | 181,350 | ||||||||||||||
Dividends
declared per common share
|
$ | 0.15 | $ | 0.15 | $ | 0.45 | $ | 0.45 |
CIT GROUP INC. AND SUBSIDIARIES
Quarters Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2016
|
2015
|
2016
|
2015
|
|||||||||||||||
Net Income
before attribution of noncontrolling interests
|
$ | 132.8 | $ | 693.1 | $ | 293.8 | $ | 912.0 | ||||||||||
Other
comprehensive income (loss), net of tax:
|
||||||||||||||||||
Foreign
currency translation adjustments
|
(2.2 | ) | (8.7 | ) | 16.3 | (33.4 | ) | |||||||||||
Net
unrealized gains (losses) on available for sale securities
|
5.6 | (6.1 | ) | 20.3 | (5.9 | ) | ||||||||||||
Changes in
benefit plans net gain (loss) and prior service (cost)/credit
|
0.1 | (0.7 | ) | 1.3 | (1.1 | ) | ||||||||||||
Other
comprehensive income (loss), net of tax
|
3.5 | (15.5 | ) | 37.9 | (40.4 | ) | ||||||||||||
Comprehensive
income before noncontrolling interests
|
136.3 | 677.6 | 331.7 | 871.6 | ||||||||||||||
Comprehensive
loss attributable to noncontrolling interests
|
| | | 0.1 | ||||||||||||||
Comprehensive
income
|
$ | 136.3 | $ | 677.6 | $ | 331.7 | $ | 871.7 |
CIT GROUP INC. AND SUBSIDIARIES
Common
Stock |
Paid-in
Capital |
Retained
Earnings |
Accumulated
Other Comprehensive Income (Loss) |
Treasury
Stock |
Noncontrolling
Minority Interests |
Total
Equity |
||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31,
2015
|
$ | 2.0 | $ | 8,718.1 | $ | 2,557.4 | $ | (142.1 | ) | $ | (157.3 | ) | $ | 0.5 | $ | 10,978.6 | ||||||||||||||
Net
income
|
| | 293.8 | | | | 293.8 | |||||||||||||||||||||||
Other
comprehensive income, net of tax
|
| | | 37.9 | | | 37.9 | |||||||||||||||||||||||
Dividends
paid
|
| | (92.3 | ) | | | | (92.3 | ) | |||||||||||||||||||||
Amortization of
restricted stock, stock option and performance shares expenses
|
| 38.2 | | | (20.7 | ) | | 17.5 | ||||||||||||||||||||||
Issuance of
common stock
|
0.1 | | | | | | 0.1 | |||||||||||||||||||||||
Employee stock
purchase plan
|
| 1.9 | | | | | 1.9 | |||||||||||||||||||||||
September
30, 2016
|
$ | 2.1 | $ | 8,758.2 | $ | 2,758.9 | $ | (104.2 | ) | $ | (178.0 | ) | $ | 0.5 | $ | 11,237.5 | ||||||||||||||
December 31,
2014
|
$ | 2.0 | $ | 8,603.6 | $ | 1,615.7 | $ | (133.9 | ) | $ | (1,018.5 | ) | $ | (5.4 | ) | $ | 9,063.5 | |||||||||||||
Net
income
|
| | 912.1 | | | (0.1 | ) | 912.0 | ||||||||||||||||||||||
Other
comprehensive loss, net of tax
|
| | | (40.4 | ) | | | (40.4 | ) | |||||||||||||||||||||
Dividends
paid
|
| | (84.4 | ) | | | | (84.4 | ) | |||||||||||||||||||||
Amortization of
restricted stock, stock option and performance shares expenses
|
| 59.8 | | | (22.0 | ) | | 37.8 | ||||||||||||||||||||||
Issuance of
common stock acquisition
|
| 45.6 | | | 1,416.4 | | 1,462.0 | |||||||||||||||||||||||
Repurchase of
common stock
|
| | | | (531.8 | ) | | (531.8 | ) | |||||||||||||||||||||
Employee stock
purchase plan
|
| 1.0 | | | | | 1.0 | |||||||||||||||||||||||
Purchase of
noncontrolling interest and distribution of earnings and capital
|
| (26.5 | ) | | | | 6.0 | (20.5 | ) | |||||||||||||||||||||
September
30, 2015
|
$ | 2.0 | $ | 8,683.5 | $ | 2,443.4 | $ | (174.3 | ) | $ | (155.9 | ) | $ | 0.5 | $ | 10,799.2 |
CIT GROUP INC. AND SUBSIDIARIES
Nine Months Ended September 30,
|
||||||||||
---|---|---|---|---|---|---|---|---|---|---|
2016
|
2015
|
|||||||||
Cash Flows
From Operations
|
||||||||||
Net
income
|
$ | 293.8 | $ | 912.1 | ||||||
Adjustments to
reconcile net income to net cash flows from operations:
|
||||||||||
Provision for
credit losses
|
173.6 | 102.9 | ||||||||
Net
depreciation, amortization and (accretion)
|
598.1 | 582.1 | ||||||||
Net gains on
asset sales and impairments on assets held for sale
|
(58.6 | ) | (34.2 | ) | ||||||
Provision
(benefit) for deferred income taxes
|
143.1 | (563.6 | ) | |||||||
(Increase)
decrease in finance receivables held for sale
|
168.1 | (117.1 | ) | |||||||
Net reimbursement of
expense from FDIC
|
3.1 | 2.2 | ||||||||
Decrease in other assets
|
166.0 | 9.7 | ||||||||
Decrease in
other liabilities
|
(5.8 | ) | (100.4 | ) | ||||||
Net cash flows
provided by operations
|
1,481.4 | 793.7 | ||||||||
Cash Flows
From Investing Activities
|
||||||||||
Changes in
loans, net
|
316.8 | (1,134.7 | ) | |||||||
Purchases of
investment securities
|
(3,344.5 | ) | (6,964.8 | ) | ||||||
Proceeds from
maturities of investment securities
|
2,813.3 | 7,139.2 | ||||||||
Proceeds from
asset and receivable sales
|
1,182.5 | 1,427.7 | ||||||||
Purchases of
assets to be leased and other equipment
|
(1,382.8 | ) | (1,859.1 | ) | ||||||
Net decrease in
short-term factoring receivables
|
(288.1 | ) | (32.3 | ) | ||||||
Purchases of
restricted stock
|
| (128.9 | ) | |||||||
Proceeds from
redemption of restricted stock
|
32.3 | 20.0 | ||||||||
Payments to the
FDIC under loss share agreements
|
(2.2 | ) | (17.4 | ) | ||||||
Proceeds from
the FDIC under loss share agreements and participation agreements
|
83.9 | 11.3 | ||||||||
Proceeds from
sale of OREO, net of repurchases
|
103.3 | 24.2 | ||||||||
Acquisition,
net of cash received
|
| 2,521.2 | ||||||||
Net change in
restricted cash
|
(22.4 | ) | 151.1 | |||||||
Net cash flows
(used in) provided by investing activities
|
(507.9 | ) | 1,157.5 | |||||||
Cash Flows
From Financing Activities
|
||||||||||
Proceeds from
the issuance of term debt
|
2.7 | 1,606.5 | ||||||||
Repayments of
term debt
|
(1,320.0 | ) | (3,700.3 | ) | ||||||
Proceeds from
FHLB advances
|
1,645.5 | 5,164.1 | ||||||||
Repayments of
FHLB debt
|
(2,324.9 | ) | (5,168.8 | ) | ||||||
Net increase in
deposits
|
80.9 | 1,943.1 | ||||||||
Collection of
security deposits and maintenance funds
|
270.9 | 236.1 | ||||||||
Use of security
deposits and maintenance funds
|
(118.2 | ) | (127.1 | ) | ||||||
Repurchase of
common stock
|
| (531.8 | ) | |||||||
Dividends
paid
|
(92.3 | ) | (84.4 | ) | ||||||
Purchase of
noncontrolling interest
|
| (20.5 | ) | |||||||
Payments on
affordable housing investment credits
|
(8.4 | ) | (0.2 | ) | ||||||
Net cash flows
used in financing activities
|
(1,863.8 | ) | (683.3 | ) | ||||||
(Decrease)
Increase in unrestricted cash and cash equivalents
|
(890.3 | ) | 1,267.9 | |||||||
Unrestricted
cash and cash equivalents, beginning of period
|
7,470.6 | 6,155.5 | ||||||||
Unrestricted
cash and cash equivalents, end of period
|
$ | 6,580.3 | $ | 7,423.4 | ||||||
Supplementary Cash Flow Disclosure
|
||||||||||
Interest
paid
|
$ | (902.9 | ) | $ | (859.3 | ) | ||||
Federal,
foreign, state and local income taxes refunded (paid), net
|
$ | 49.9 | $ | (26.4 | ) | |||||
Supplementary Non Cash Flow Disclosure
|
||||||||||
Transfer of
assets from held for investment to held for sale
|
$ | 2,020.5 | $ | 2,049.0 | ||||||
Transfer of
assets from held for sale to held for investment
|
$ | 91.0 | $ | 93.1 | ||||||
Deposits on
flight equipment purchases applied to acquisition of flight equipment purchases, and origination of finance leases, capitalized interest, and buyer
furnished equipment
|
$ | 210.4 | $ | 288.1 | ||||||
Transfers of
assets from held for investment to OREO
|
$ | 71.6 | $ | 26.4 | ||||||
Issuance of
common stock as consideration
|
$ | | $ | 1,462.0 |
n
|
ASU 2014-12, Compensation Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period ; |
n
|
ASU 2015-01, Income Statement Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items ; |
n
|
ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis ; |
n
|
ASU 2015-03, Interest Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs ; and |
n
|
ASU 2015-15, Interest-Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting. |
n
|
More limited partnerships and similar entities will be evaluated for consolidation under the revised consolidation requirements that apply to VIEs. |
n
|
Fees paid to a decision maker or service provider are less likely to be considered a variable interest in a VIE. |
n
|
Variable interests in a VIE held by related parties of a reporting enterprise are less likely to require the reporting enterprise to consolidate the VIE. |
n
|
There is a new approach for determining whether equity at-risk holders of entities that are not similar to limited partnerships have power to direct the entitys key activities when the entity has an outsourced manager whose fee is a variable interest. |
n
|
The deferral of consolidation requirements for certain investment companies and similar entities of the VIE in ASU 2009-17 is eliminated. |
n
|
A new consolidation analysis is required for VIEs, including many limited partnerships and similar entities that previously were not considered VIEs. |
n
|
It is less likely that the general partner or managing member of limited partnerships and similar entities will be required to consolidate the entity when the other investors in the entity lack both participating rights and kick-out rights. |
n
|
Limited partnerships and similar entities that are not VIEs will not be consolidated by the general partner. |
n
|
It is less likely that decision makers or service providers involved with a VIE will be required to consolidate the VIE. |
n
|
Entities for which decision making rights are conveyed through a contractual arrangement are less likely to be considered VIEs. |
n
|
Reporting enterprises with interests in certain investment companies and similar entities that are considered VIEs will no longer evaluate those entities for consolidation based on majority exposure to variability. |
n
|
ASU 2014-09, Revenue from contracts with customers (Topic 606) |
n
|
ASU 2014-15, Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern; |
n
|
ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date; |
n
|
ASU 2016-01, Financial Instruments Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities ; |
n
|
ASU 2016-02, Leases (Topic 842) ; |
n
|
ASU 2016-05, Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships ; |
n
|
ASU 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments ; |
n
|
ASU 2016-07, Investments Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting ; |
n
|
ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) ; |
n
|
ASU 2016-09, Compensation Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting; |
n
|
ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing ; |
n
|
ASU 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC guidance because of ASU 2014-09 and ASU 2014-16 pursuant to staff announcements at the March 3, 2016 EITF meeting; |
n
|
ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients; |
n
|
ASU 2016-13, Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments; and |
n
|
ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. |
1.
|
Entities must perform a going concern assessment by evaluating their ability to meet their obligations for a look-forward period of one year from the financial statement issuance date (or date the financial statements are available to be issued). |
2.
|
Disclosures are required if it is probable an entity will be unable to meet its obligations within the look-forward period. Incremental substantial doubt disclosure is required if the probability is not mitigated by managements plans. |
3.
|
Pursuant to the ASU, substantial doubt about an entitys ability to continue as a going concern exists if it is probable that the entity will be unable to meet its obligations as they become due within one year after the date the annual or interim financial statements are issued or available to be issued (assessment date). |
n
|
Supersede current guidance to classify equity securities into different categories ( i.e., trading or available-for-sale); |
n
|
Require equity investments to be measured at fair value with changes in fair value recognized in net income, rather than other comprehensive income. This excludes those investments accounted for under the equity method, or those that result in consolidation of the investee; |
n
|
Simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment (similar to goodwill); |
n
|
Eliminate the requirement to disclose the method(s) and significant assumptions used to estimate fair value that is required to be disclosed for financial instruments measured at amortized cost; |
n
|
Require the use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes; |
n
|
Require an entity to present separately in other comprehensive income the portion of the change in fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with fair value option for financial instruments; |
n
|
Require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset ( i.e., securities, or loans and receivables) on the balance sheet or accompanying notes to the financial statements; |
n
|
Clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entitys other deferred tax assets. |
basis or a modified retrospective basis, is effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. CIT is currently reviewing the impact of adopting this guidance on CITs financial statement or disclosures.
1.
|
Identify the contract with the customer. |
2.
|
Identify the performance obligations in the contract. |
3.
|
Determine the transaction price. |
4.
|
Allocate the transaction price to the performance obligations. |
5.
|
Recognize revenue when or as each performance obligation is satisfied. |
are performance obligations if they are immaterial in the context of the contract. In addition, an entity is permitted to account for shipping and handling activities that occur after the customer has obtained control of a good as an activity to fulfill the promise to transfer the good rather than as an additional promised service. The ASU also improves the guidance on assessing whether promises to transfer goods or services are separately identifiable. For licensing implementation, the ASU clarifies the timing of revenue recognition from a license to intellectual property. In addition, a sales-based or usage-based royalty is promised in exchange for a license and, therefore, the royaltys recognition constraint applies whenever a license is the sole or predominant item to which the royalty relates.
n
|
Collectability ASU 2016-12 clarifies the objective of the entitys collectability assessment and contains new guidance on when an entity would recognize as revenue consideration it receives if the entity concludes that collectability is not probable; |
n
|
Presentation of sales tax and other similar taxes collected from customers Entities are permitted to present revenue net of sales taxes collected on behalf of governmental authorities ( i.e., to exclude from the transaction price sales taxes that meet certain criteria); |
n
|
Noncash consideration An entitys calculation of the transaction price for contracts containing noncash consideration would include the fair value of the noncash consideration to be received as of the contract inception date. Further, subsequent changes in the fair value of noncash consideration after contract inception would be subject to the variable consideration constraint only if the fair value varies for reasons other than its form; |
n
|
Contract modifications and completed contracts at transition The ASU establishes a practical expedient for contract modifications at transition and defines completed contracts as those for which all (or substantially all) revenue was recognized under the applicable revenue guidance before the new revenue standard was initially applied; |
n
|
Transition technical correction Entities that elect to use the full retrospective transition method to adopt the new revenue standard would no longer be required to disclose the effect of the change in accounting principle on the period of adoption; however, entities would still be required to disclose the effects on pre-adoption periods that were retrospectively adjusted. |
n
|
Requiring companies to record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement; a Company would account for excess tax benefits and deficiencies as discrete items in the period in which they occur (i.e., they would be excluded from the estimated annual effective tax rate). |
n
|
Eliminating the requirement that excess tax benefits be realized ( i.e., reduce income taxes payable) before being recognized, and to require excess tax benefits to be presented as an operating activity in the statement of cash flows. |
n
|
Using employees shares to satisfy the employers statutory income tax withholding obligation. The threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates in the applicable jurisdictions. Cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity. |
n
|
Allowing an entity to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. |
n
|
Use of an ALLL approach (versus permanently writing down the securitys cost basis) for impairment; |
n
|
Limit the ALLL to the amount at which the securitys fair value is less than its amortized cost basis; |
n
|
Removing the consideration for the length of time fair value has been less than amortized cost when assessing credit loss; |
n
|
Removing the consideration for recoveries in fair value after the balance sheet date when assessing whether a credit loss exists. |
n
|
Issue 1 Debt prepayment or debt extinguishment costs Cash payments for debt prepayment or debt extinguishment costs should be classified as cash outflows for financing activities. |
n
|
Issue 2 Settlement of zero-coupon debt instruments Cash payments for the settlement of zero-coupon debt instruments, including other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, should be classified as cash outflows for operating activities for the portion attributable to interest and as cash outflows for financing activities for the portion attributable to principal. |
n
|
Issue 3 Contingent consideration payments made after a business combination Cash payments made soon after an acquisitions consummation date ( i.e. , approximately three months or less) should be classified as cash outflows for investing activities. Payments made thereafter should be classified as cash outflows for financing activities up to the amount of the original contingent consideration liability. Payments made in excess of the amount of the original contingent consideration liability should be classified as cash outflows for operating activities. |
n
|
Issue 4 Proceeds from the settlement of insurance claim Cash payments received from the settlement of insurance claims should be classified on the basis of the nature of the loss (or each component loss, if an entity receives a lump-sum settlement). |
n
|
Issue 5 Proceeds from the settlement of corporate-owned life insurance (COLI) policies, including bank-owned life insurance (BOLI) policies Cash payments received from the settlement of COLI or BOLI policies should be classified as cash inflows from investing activities. Cash payments for premiums on COLI or BOLI policies may be classified as cash outflows for investing, operating, or a combination of investing and operating activities. |
n
|
Issue 6 Distributions received from equity method investments The guidance provides an accounting policy election for classifying distributions received from equity method investments. Such amounts can be classified using a 1) cumulative earnings approach, or 2) nature of distribution (or look-through) approach. |
n
|
Issue 7 Beneficial interests in securitization transactions A transferors beneficial interest obtained in a securitization of financial assets should be disclosed as a noncash activity. Cash receipts from a transferors beneficial interests in securitized trade receivables should be classified as cash inflows from investing activities. |
n
|
Issue 8 Separately identifiable cash flows and application of the predominance principle Entities should use reasonable judgment to separate cash flows. In the absence of specific guidance, an entity should classify each separately identifiable cash source and use on the basis of the nature of the underlying cash flows. For cash flows with aspects of more than one class that cannot be separated, the classification should be based on the activity that is likely to be the predominant source or use of cash flow. |
Condensed Balance Sheet of Discontinued Operation
(dollars in millions)
September 30,
2016 |
December 31,
2015 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Net Finance
Receivables
(1)
|
$ | 393.0 | $ | 449.5 | ||||||
Other
assets
(2)
|
59.9 | 51.0 | ||||||||
Assets of
discontinued operations
|
$ | 452.9 | $ | 500.5 | ||||||
Secured
borrowings
(1)
|
$ | 386.6 | $ | 440.6 | ||||||
Other
liabilities
(3)
|
541.2 | 255.6 | ||||||||
Liabilities of
discontinued operations
|
$ | 927.8 | $ | 696.2 |
(1)
|
Net finance receivables include $385.6 million and $440.2 million of securitized balances at September 30, 2016 and December 31, 2015, respectively, and $7.4 million and $9.3 million of additional draws awaiting securitization respectively. Secured borrowings relate to those receivables. |
(2)
|
Amount includes servicing advances, servicer receivables and property and equipment, net of accumulated depreciation. |
(3)
|
Other liabilities include contingent liabilities, reverse mortgage servicing liabilities and other accrued liabilities. |
Condensed
Statements of Operations
(dollars in millions)
Quarters Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2016
|
2015
|
2016
|
2015
|
|||||||||||||||
Interest
income
(1)
|
$ | 2.8 | $ | 2.2 | $ | 8.7 | $ | 2.2 | ||||||||||
Interest
expense
(1)
|
(2.5 | ) | (2.3 | ) | (8.1 | ) | (2.3 | ) | ||||||||||
Other income
(loss)
(2)
|
(10.3 | ) | 6.1 | 7.3 | 6.1 | |||||||||||||
Operating
expenses
(3)
|
(14.9 | ) | (11.8 | ) | (276.6 | ) | (11.8 | ) | ||||||||||
Loss from
discontinued operation before benefit for income taxes
|
(24.9 | ) | (5.8 | ) | (268.7 | ) | (5.8 | ) | ||||||||||
Benefit for
income taxes
(4)
|
9.3 | 2.1 | 81.3 | 2.1 | ||||||||||||||
Loss from
discontinued operation, net of taxes
|
$ | (15.6 | ) | $ | (3.7 | ) | $ | (187.4 | ) | $ | (3.7 | ) |
(1)
|
Includes amortization for the premium associated with the HECM loans and related secured borrowings. |
(2)
|
For the quarter ended September 30, 2016, other income (loss) includes a $19 million impairment charge to the servicing liability related to our reverse mortgage servicing operations. |
(3)
|
For the quarter and nine months ended September 30, 2016, operating expense is comprised of $5.1 million and $11 million, respectively, in salaries and benefits, $6.6 million and $16.1 million, respectively, in professional and legal services, and $3.2 million and $10.5 million, respectively, for other expenses such as data processing, premises and equipment, and miscellaneous charges. In addition, operating expenses for the nine months ended September 30, 2016 included a one-time increase to the servicing-related reserve of approximately $230 million due to a change in estimate, which is net of a corresponding increase in the indemnification receivable from the FDIC. For the quarter and nine months ended September 30, 2015, operating expense is comprised of $4.4 million in salaries and benefits, $2.8 million in professional services and $4.6 million for other expenses such as data processing, premises and equipment, legal settlement, and miscellaneous charges. |
(4)
|
For the quarter and nine months ended September 30, 2016, the Companys tax rate for discontinued operations is 38% and 30%, respectively. For the quarter and nine months ended September 30, 2015, the Companys tax rate for discontinued operations is 36.5%. |
Nine Months Ended
|
||||||||||
---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
September 30,
2015 |
|||||||||
Net cash flows
used for operations
|
$ | (32.0 | ) | $ | (1.4 | ) | ||||
Net cash flows
provided by investing activities
|
69.8 | 9.8 |
Finance
Receivables by Product
(dollars in millions)
September 30,
2016 |
December 31,
2015 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Commercial
loans
|
$ | 20,341.8 | $ | 21,380.9 | ||||||
Direct financing
leases and leveraged leases
|
2,833.7 | 3,427.5 | ||||||||
Total
commercial
|
23,175.5 | 24,808.4 | ||||||||
Consumer
loans
|
6,742.7 | 6,863.3 | ||||||||
Total finance
receivables
|
29,918.2 | 31,671.7 | ||||||||
Finance
receivables held for sale
(1)
|
2,361.7 | 1,985.1 | ||||||||
Finance
receivables and held for sale receivables
(1)
|
$ | 32,279.9 | $ | 33,656.8 |
(1)
|
Assets held for sale on the Balance Sheet at September 30, 2016 includes finance receivables and operating lease equipment primarily related to portfolios in Canada, China, Business Air and Commercial Air. As discussed in subsequent tables, since the Company manages the credit risk and collections of finance receivables held for sale consistently with its finance receivables held for investment, the aggregate amount is presented in this table. |
Finance
Receivables
(dollars in millions)
September 30, 2016
|
December 31, 2015
|
|||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Domestic | Foreign | Total | Domestic | Foreign | Total | ||||||||||||||||||||
Transportation
Finance
|
$ | 317.3 | $ | 1,906.9 | $ | 2,224.2 | $ | 815.1 | $ | 2,727.0 | $ | 3,542.1 | ||||||||||||||
Commercial
Banking
|
20,265.6 | 299.1 | 20,564.7 | 20,607.9 | 321.3 | 20,929.2 | ||||||||||||||||||||
Consumer and
Community Banking
(1)
|
7,129.3 | | 7,129.3 | 7,200.4 | | 7,200.4 | ||||||||||||||||||||
Total
|
$ | 27,712.2 | $ | 2,206.0 | $ | 29,918.2 | $ | 28,623.4 | $ | 3,048.3 | $ | 31,671.7 |
(1)
|
The Consumer and Community Banking segment includes certain commercial loans, primarily consisting of a portfolio of Small Business Administration (SBA) loans. These loans are excluded from the Consumer loan balance and included in the Commercial loan balances in the tables throughout this note. |
Components
of Net Investment in Finance Receivables
(dollars in millions)
September 30,
2016 |
December 31,
2015 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Unearned
income
|
$ | (715.7 | ) | $ | (870.4 | ) | ||||
Unamortized
premiums / (discounts)
|
(39.1 | ) | (34.0 | ) | ||||||
Accretable yield
on Purchased Credit-Impaired (PCI) loans
|
1,256.8 | 1,294.0 | ||||||||
Net unamortized
deferred costs and (fees)
(1)
|
49.0 | 42.9 |
(1)
|
Balance relates to Commercial Banking and Transportation Finance segments. |
n
|
Pass finance receivables in this category do not meet the criteria for classification in one of the categories below. |
n
|
Special mention a special mention asset exhibits potential weaknesses that deserve managements close attention. If left uncorrected, these potential weaknesses may, at some future date, result in the deterioration of the repayment prospects. |
n
|
Classified a classified asset ranges from: (1) assets that exhibit a well-defined weakness and are inadequately protected by the current sound worth and paying capacity of the borrower, and are characterized by the distinct possibility that some loss will be sustained if the deficiencies are not corrected to (2) assets with weaknesses that make collection or liquidation in full unlikely on the basis of current facts, conditions, and values. Assets in this classification can be accruing or on non-accrual depending on the evaluation of these factors. |
Grade: |
Pass
|
Special
Mention |
Classified-
accruing |
Classified-
non-accrual |
PCI Loans
|
Total
|
||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September
30, 2016
|
||||||||||||||||||||||||||
Transportation Finance
|
||||||||||||||||||||||||||
Aerospace
|
$ | 1,301.6 | $ | 231.5 | $ | 53.0 | $ | 5.0 | $ | | $ | 1,591.1 | ||||||||||||||
Rail
|
103.6 | 1.4 | 1.3 | | | 106.3 | ||||||||||||||||||||
Maritime
Finance
|
845.6 | 170.3 | 496.1 | 49.4 | | 1,561.4 | ||||||||||||||||||||
Total
Transportation
|
2,250.8 | 403.2 | 550.4 | 54.4 | | 3,258.8 | ||||||||||||||||||||
Commercial
Banking
|
||||||||||||||||||||||||||
Commercial
Finance
|
7,049.5 | 751.9 | 602.4 | 131.1 | 45.1 | 8,580.0 | ||||||||||||||||||||
Real Estate
Finance
|
5,060.5 | 178.0 | 92.5 | 6.9 | 76.0 | 5,413.9 | ||||||||||||||||||||
Business
Capital
|
6,055.2 | 533.0 | 272.4 | 41.9 | | 6,902.5 | ||||||||||||||||||||
Total
Commercial Banking
|
18,165.2 | 1,462.9 | 967.3 | 179.9 | 121.1 | 20,896.4 | ||||||||||||||||||||
Consumer
& Community Banking
|
||||||||||||||||||||||||||
Other Consumer
Banking
(1)
|
348.5 | 13.5 | 20.2 | 0.1 | 4.3 | 386.6 | ||||||||||||||||||||
Non-
Strategic Portfolios
|
814.4 | 52.5 | 46.8 | 40.0 | | 953.7 | ||||||||||||||||||||
Total
|
$ | 21,578.9 | $ | 1,932.1 | $ | 1,584.7 | $ | 274.4 | $ | 125.4 | $ | 25,495.5 | ||||||||||||||
December
31, 2015
|
||||||||||||||||||||||||||
Transportation Finance
|
||||||||||||||||||||||||||
Aerospace
|
$ | 1,635.7 | $ | 65.0 | $ | 46.2 | $ | 15.4 | $ | | $ | 1,762.3 | ||||||||||||||
Rail
|
118.9 | 1.4 | 0.6 | | | 120.9 | ||||||||||||||||||||
Maritime
Finance
|
1,309.0 | 162.0 | 207.4 | | | 1,678.4 | ||||||||||||||||||||
Total
Transportation Finance
|
3,063.6 | 228.4 | 254.2 | 15.4 | | 3,561.6 | ||||||||||||||||||||
Commercial
Banking
|
||||||||||||||||||||||||||
Commercial
Finance
|
8,215.0 | 626.4 | 389.9 | 131.5 | 69.4 | 9,432.2 | ||||||||||||||||||||
Real Estate
Finance
|
5,143.2 | 97.6 | 18.6 | 3.6 | 94.6 | 5,357.6 | ||||||||||||||||||||
Business
Capital
|
5,649.0 | 517.0 | 320.1 | 56.0 | | 6,542.1 | ||||||||||||||||||||
Total
Commercial Banking
|
19,007.2 | 1,241.0 | 728.6 | 191.1 | 164.0 | 21,331.9 | ||||||||||||||||||||
Consumer
& Community Banking
|
||||||||||||||||||||||||||
Other Consumer
Banking
(1)
|
300.6 | 12.1 | 18.3 | | 5.3 | 336.3 | ||||||||||||||||||||
Non-
Strategic Portfolios
|
1,286.3 | 115.4 | 60.1 | 56.0 | | 1,517.8 | ||||||||||||||||||||
Total
|
$ | 23,657.7 | $ | 1,596.9 | $ | 1,061.2 | $ | 262.5 | $ | 169.3 | $ | 26,747.6 |
(1)
|
The Consumer and Community Banking segment includes certain commercial loans, primarily consisting of a portfolio of Small Business Administration (SBA) loans. These loans are excluded from the Consumer loan balance and included in the Commercial loan balances. |
Consumer
Loan LTV Distribution
(dollars in millions)
Single Family Residential
|
Reverse Mortgage
|
||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Covered Loans
|
Non-covered Loans
|
Total
Single Family |
Covered Loans |
Non-covered Loans
|
Total Reverse | Total Consumer | |||||||||||||||||||||||||||||||||||||
LTV Range |
Non-PCI
|
PCI
|
Non-PCI
|
PCI
|
Residential
|
Non-PCI
|
Non-PCI
|
PCI
|
Mortgages
|
Loans
|
|||||||||||||||||||||||||||||||||
September 30, 2016
|
|||||||||||||||||||||||||||||||||||||||||||
Greater than
125%
|
$ | 1.6 | $ | 296.0 | $ | 13.7 | $ | | $ | 311.3 | $ | 0.6 | $ | 7.6 | $ | 33.0 | $ | 41.2 | $ | 352.5 | |||||||||||||||||||||||
101%
125%
|
3.2 | 489.8 | 14.3 | | 507.3 | 1.1 | 11.7 | 10.2 | 23.0 | 530.3 | |||||||||||||||||||||||||||||||||
80%
100%
|
281.7 | 577.7 | 34.3 | | 893.7 | 26.5 | 40.8 | 8.2 | 75.5 | 969.2 | |||||||||||||||||||||||||||||||||
Less than
80%
|
1,559.0 | 871.2 | 1,720.0 | 9.1 | 4,159.3 | 415.4 | 304.2 | 9.6 | 729.2 | 4,888.5 | |||||||||||||||||||||||||||||||||
Not
Applicable
(1)
|
| | 2.2 | 2.2 | | | | | 2.2 | ||||||||||||||||||||||||||||||||||
Total
|
$ | 1,845.5 | $ | 2,234.7 | $ | 1,784.5 | $ | 9.1 | $ | 5,873.8 | $ | 443.6 | $ | 364.3 | $ | 61.0 | $ | 868.9 | $ | 6,742.7 | |||||||||||||||||||||||
December 31,
2015
|
|||||||||||||||||||||||||||||||||||||||||||
Greater than
125%
|
$ | 1.1 | $ | 395.6 | $ | 0.8 | $ | 15.7 | $ | 413.2 | $ | 1.0 | $ | 3.9 | $ | 39.3 | $ | 44.2 | $ | 457.4 | |||||||||||||||||||||||
101%
125%
|
3.6 | 619.9 | 0.2 | 14.9 | 638.6 | 2.5 | 6.5 | 17.0 | 26.0 | 664.6 | |||||||||||||||||||||||||||||||||
80%
100%
|
449.3 | 552.1 | 14.3 | 11.4 | 1,027.1 | 26.5 | 37.4 | 7.0 | 70.9 | 1,098.0 | |||||||||||||||||||||||||||||||||
Less than
80%
|
1,621.0 | 829.3 | 1,416.1 | 12.9 | 3,879.3 | 432.6 | 312.5 | 11.1 | 756.2 | 4,635.5 | |||||||||||||||||||||||||||||||||
Not
Applicable
(1)
|
| | 7.8 | | 7.8 | | | | | 7.8 | |||||||||||||||||||||||||||||||||
Total
|
$ | 2,075.0 | $ | 2,396.9 | $ | 1,439.2 | $ | 54.9 | $ | 5,966.0 | $ | 462.6 | $ | 360.3 | $ | 74.4 | $ | 897.3 | $ | 6,863.3 |
(1)
|
Certain Consumer Loans do not have LTVs, including the Credit Card portfolio. |
Covered
Loans
(dollars in millions)
September 30,
2016 |
December 31,
2015 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Consumer and
Community Banking loans HFI at carrying value
|
||||||||||
PCI
|
$ | 2,234.7 | $ | 2,396.9 | ||||||
Non-PCI
|
2,289.1 | 2,537.6 | ||||||||
Total
|
$ | 4,523.8 | $ | 4,934.5 |
Past
Due Finance and Held for Sale Receivables
(dollars in millions)
Past Due
|
|||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
3059 Days
Past Due |
6089 Days
Past Due |
90 Days or
Greater |
Total
Past Due |
Current
(1)
|
PCI Loans
(2)
|
Total Finances
Receivables |
|||||||||||||||||||||||||
September 30, 2016
|
|||||||||||||||||||||||||||||||
Transportation Finance
|
|||||||||||||||||||||||||||||||
Aerospace
|
$ | | $ | 0.3 | $ | 0.2 | $ | 0.5 | $ | 1,590.6 | $ | | $ | 1,591.1 | |||||||||||||||||
Rail
|
1.4 | 0.7 | 1.9 | 4.0 | 102.3 | | 106.3 | ||||||||||||||||||||||||
Maritime
Finance
|
| | | | 1,561.4 | | 1,561.4 | ||||||||||||||||||||||||
Total
Transportation Finance
|
1.4 | 1.0 | 2.1 | 4.5 | 3,254.3 | | 3,258.8 | ||||||||||||||||||||||||
Commercial Banking
|
|||||||||||||||||||||||||||||||
Commercial
Finance
|
| 34.9 | 32.1 | 67.0 | 8,467.9 | 45.1 | 8,580.0 | ||||||||||||||||||||||||
Real Estate
Finance
|
| 0.1 | | 0.1 | 5,337.8 | 76.0 | 5,413.9 | ||||||||||||||||||||||||
Business
Capital
|
93.5 | 24.4 | 13.0 | 130.9 | 6,771.6 | | 6,902.5 | ||||||||||||||||||||||||
Total
Commercial Banking
|
93.5 | 59.4 | 45.1 | 198.0 | 20,577.3 | 121.1 | 20,896.4 | ||||||||||||||||||||||||
Consumer
& Community Banking
|
|||||||||||||||||||||||||||||||
Legacy Consumer
Mortgages
|
24.4 | 7.2 | 33.5 | 65.1 | 2,670.9 | 2,304.8 | 5,040.8 | ||||||||||||||||||||||||
Other Consumer
Banking
|
6.7 | | 1.0 | 7.7 | 2,118.2 | 4.3 | 2,130.2 | ||||||||||||||||||||||||
Total Consumer
& Community Banking
|
31.1 | 7.2 | 34.5 | 72.8 | 4,789.1 | 2,309.1 | 7,171.0 | ||||||||||||||||||||||||
Non-Strategic Portfolios
|
6.9 | 3.5 | 15.0 | 25.4 | 928.3 | | 953.7 | ||||||||||||||||||||||||
Total
|
$ | 132.9 | $ | 71.1 | $ | 96.7 | $ | 300.7 | $ | 29,549.0 | $ | 2,430.2 | $ | 32,279.9 | |||||||||||||||||
December 31,
2015
|
|||||||||||||||||||||||||||||||
Transportation Finance
|
|||||||||||||||||||||||||||||||
Aerospace
|
$ | 1.4 | $ | | $ | 15.4 | $ | 16.8 | $ | 1,745.5 | $ | | $ | 1,762.3 | |||||||||||||||||
Rail
|
8.5 | 2.0 | 2.1 | 12.6 | 108.3 | | 120.9 | ||||||||||||||||||||||||
Maritime
Finance
|
| | | | 1,678.4 | | 1,678.4 | ||||||||||||||||||||||||
Total
Transportation Finance
|
9.9 | 2.0 | 17.5 | 29.4 | 3,532.2 | | 3,561.6 | ||||||||||||||||||||||||
Commercial
Banking
|
|||||||||||||||||||||||||||||||
Commercial
Finance
|
| | 20.5 | 20.5 | 9,342.3 | 69.4 | 9,432.2 | ||||||||||||||||||||||||
Real Estate
Finance
|
1.9 | | 0.7 | 2.6 | 5,260.4 | 94.6 | 5,357.6 | ||||||||||||||||||||||||
Business
Capital
|
131.1 | 32.8 | 26.8 | 190.7 | 6,351.4 | | 6,542.1 | ||||||||||||||||||||||||
Total
Commercial Banking
|
133.0 | 32.8 | 48.0 | 213.8 | 20,954.1 | 164.0 | 21,331.9 | ||||||||||||||||||||||||
Consumer & Community Banking
|
|||||||||||||||||||||||||||||||
Legacy Consumer
Mortgages
|
15.8 | 1.7 | 4.1 | 21.6 | 2,923.8 | 2,526.2 | 5,471.6 | ||||||||||||||||||||||||
Other Consumer
Banking
|
2.7 | 0.3 | 0.4 | 3.4 | 1,765.2 | 5.3 | 1,773.9 | ||||||||||||||||||||||||
Total Consumer
& Community Banking
|
18.5 | 2.0 | 4.5 | 25.0 | 4,689.0 | 2,531.5 | 7,245.5 | ||||||||||||||||||||||||
Non-Strategic Portfolios
|
18.7 | 22.1 | 33.7 | 74.5 | 1,443.3 | | 1,517.8 | ||||||||||||||||||||||||
Total
|
$ | 180.1 | $ | 58.9 | $ | 103.7 | $ | 342.7 | $ | 30,618.6 | $ | 2,695.5 | $ | 33,656.8 |
(1)
|
Due to their nature, reverse mortgage loans are included in Current, as they do not have contractual payments due at a specified time. |
(2)
|
PCI loans are written down at acquisition to their fair value using an estimate of cash flows deemed to be collectible. Accordingly, such loans are no longer classified as past due or non-accrual even though they may be contractually past due as we expect to fully collect the new carrying values of these loans. |
Finance
Receivables on Non-Accrual Status
(dollars in millions)
September 30, 2016
|
December 31, 2015
|
||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Held for
Investment |
Held for
Sale |
Total
|
Held for
Investment |
Held for
Sale |
Total
|
||||||||||||||||||||||
Transportation Finance
|
|||||||||||||||||||||||||||
Aerospace
|
$ | | $ | 5.0 | $ | 5.0 | $ | 15.4 | $ | | $ | 15.4 | |||||||||||||||
Maritime
Finance
|
49.4 | | 49.4 | | | | |||||||||||||||||||||
Total
Transportation Finance
|
49.4 | 5.0 | 54.4 | 15.4 | | 15.4 | |||||||||||||||||||||
Commercial Banking
|
|||||||||||||||||||||||||||
Commercial
Finance
|
117.9 | 13.2 | 131.1 | 120.5 | 11.0 | 131.5 | |||||||||||||||||||||
Real Estate
Finance
|
6.9 | | 6.9 | 3.6 | | 3.6 | |||||||||||||||||||||
Business
Capital
|
41.9 | | 41.9 | 56.0 | | 56.0 | |||||||||||||||||||||
Total
Commercial Banking
|
166.7 | 13.2 | 179.9 | 180.1 | 11.0 | 191.1 | |||||||||||||||||||||
Consumer
& Community Banking
|
|||||||||||||||||||||||||||
Legacy Consumer
Mortgages
|
13.9 | | 13.9 | 4.2 | 0.6 | 4.8 | |||||||||||||||||||||
Other Consumer
Banking
|
0.3 | | 0.3 | | 0.4 | 0.4 | |||||||||||||||||||||
Total Consumer
& Community Banking
|
14.2 | | 14.2 | 4.2 | 1.0 | 5.2 | |||||||||||||||||||||
Non-Strategic Portfolios
|
| 40.0 | 40.0 | | 56.0 | 56.0 | |||||||||||||||||||||
Total
|
$ | 230.3 | $ | 58.2 | $ | 288.5 | $ | 199.7 | $ | 68.0 | $ | 267.7 | |||||||||||||||
OREO and
repossessed assets
|
88.7 | 127.3 | |||||||||||||||||||||||||
Total
non-performing assets
|
$ | 377.2 | $ | 395.0 | |||||||||||||||||||||||
Commercial
loans past due 90 days or more accruing
|
$ | 5.2 | $ | 15.6 | |||||||||||||||||||||||
Consumer loans
past due 90 days or more accruing
|
24.4 | 0.2 | |||||||||||||||||||||||||
Total Accruing
loans past due 90 days or more
|
$ | 29.6 | $ | 15.8 |
Loans
in Process of Foreclosure
(dollars in millions)
September 30,
2016 |
December 31,
2015 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
PCI
|
$ | 221.6 | $ | 320.0 | ||||||
Non-PCI
|
109.6 | 71.0 | ||||||||
Loans in
process of foreclosure
|
$ | 331.2 | $ | 391.0 | ||||||
OREO
|
$ | 83.5 | $ | 118.0 |
Impaired
Loans
(dollars in millions)
Average Recorded Investment
|
|||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
||||||||||||||||||||||||||||||
Recorded
Investment |
Unpaid
Principal Balance |
Related
Allowance |
2016
|
2015
|
2016
|
2015
|
|||||||||||||||||||||||||
September 30, 2016
|
|||||||||||||||||||||||||||||||
With no
related allowance recorded:
|
|||||||||||||||||||||||||||||||
Transportation Finance
|
|||||||||||||||||||||||||||||||
Aerospace
|
$ | | $ | | $ | | $ | | $ | | $ | 0.2 | $ | | |||||||||||||||||
Commercial Banking
|
|||||||||||||||||||||||||||||||
Commercial
Finance
|
17.5 | 34.0 | | 13.6 | 7.7 | 13.2 | 4.3 | ||||||||||||||||||||||||
Business
Capital
|
2.0 | 6.1 | | 5.5 | 5.6 | 6.2 | 5.8 | ||||||||||||||||||||||||
Real Estate
Finance
|
0.8 | 0.8 | | 0.8 | 1.7 | 1.5 | 0.8 | ||||||||||||||||||||||||
Non-Strategic
Portfolios
|
| | | | 6.1 | | 9.2 | ||||||||||||||||||||||||
With an
allowance recorded:
|
|||||||||||||||||||||||||||||||
Transportation Finance
|
|||||||||||||||||||||||||||||||
Aerospace
|
| | | | 4.7 | 3.8 | 2.4 | ||||||||||||||||||||||||
Maritime
Finance
|
49.4 | 49.4 | 6.8 | 24.7 | | 12.3 | | ||||||||||||||||||||||||
Commercial
Banking
|
|||||||||||||||||||||||||||||||
Commercial
Finance
|
100.4 | 107.7 | 23.8 | 113.6 | 45.5 | 117.1 | 40.8 | ||||||||||||||||||||||||
Business
Capital
|
4.0 | 4.0 | 2.8 | 5.9 | 8.6 | 8.6 | 4.3 | ||||||||||||||||||||||||
Real Estate
Finance
|
3.1 | 3.1 | 0.4 | 3.1 | | 2.4 | | ||||||||||||||||||||||||
Non-Strategic
Portfolios
|
| | | | 11.1 | | 9.1 | ||||||||||||||||||||||||
Total Impaired
Loans
(1)
|
177.2 | 205.1 | 33.8 | 167.2 | 91.0 | 165.3 | 76.7 | ||||||||||||||||||||||||
Total Loans
Impaired at Acquisition Date and Convenience Date
(2)
|
2,430.2 | 3,556.9 | 13.8 | 2,459.3 | 1,421.6 | 2,543.8 | 711.1 | ||||||||||||||||||||||||
Total
|
$ | 2,607.4 | $ | 3,762.0 | $ | 47.6 | $ | 2,626.5 | $ | 1,512.6 | $ | 2,709.1 | $ | 787.8 |
Recorded
Investment |
Unpaid
Principal Balance |
Related
Allowance |
Average
Recorded Investment (3) |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31,
2015
|
||||||||||||||||||
With no
related allowance recorded:
|
||||||||||||||||||
Commercial
Banking
|
||||||||||||||||||
Commercial
Finance
|
$ | 15.4 | $ | 22.8 | $ | | $ | 6.5 | ||||||||||
Business
Capital
|
6.3 | 9.7 | | 5.9 | ||||||||||||||
Real Estate
Finance
|
0.2 | 0.8 | | 0.7 | ||||||||||||||
Non-Strategic Portfolios
|
| | | 7.3 | ||||||||||||||
With an
allowance recorded:
|
||||||||||||||||||
Transportation Finance
|
||||||||||||||||||
Aerospace
|
15.4 | 15.4 | 0.4 | 5.0 | ||||||||||||||
Commercial
Banking
|
||||||||||||||||||
Commercial
Finance
|
102.6 | 112.1 | 22.7 | 53.2 | ||||||||||||||
Business
Capital
|
9.7 | 11.7 | 4.7 | 5.4 | ||||||||||||||
Non-Strategic Portfolios
|
| | | 7.3 | ||||||||||||||
Total Impaired
Loans
(1)
|
149.6 | 172.5 | 27.8 | 91.3 | ||||||||||||||
Total Loans
Impaired at Acquisition Date and Convenience Date
(2)
|
2,695.5 | 3,977.3 | 4.9 | 1,108.0 | ||||||||||||||
Total
|
$ | 2,845.1 | $ | 4,149.8 | $ | 32.7 | $ | 1,199.3 |
(1)
|
Interest income recorded for the three and nine months ended September 30, 2016 and the year ended December 31, 2015 while the loans were impaired were $0.5 million, $1.4 million and $1.5 million of which $0.2 million, $0.6 million and $0.5 million was interest recognized using cash-basis method of accounting, respectively. Interest income recorded for the three and nine months ended September 30, 2015 while the loans were impaired were $0.2 million and $0.8 million of which $0.1 million was interest recognized using cash-basis method of accounting. |
(2)
|
Details of finance receivables that were identified as impaired at the Acquisition Date are presented under Loans Acquired with Deteriorated Credit Quality. |
(3)
|
Average recorded investment for the year ended December 31, 2015. |
n
|
Instances where the primary source of payment is no longer sufficient to repay the loan in accordance with terms of the related loan document; |
n
|
Lack of current financial data related to the borrower or guarantor; |
n
|
Delinquency status of the loan; |
n
|
Borrowers experiencing problems, such as operating losses, marginal working capital, inadequate cash flow, excessive financial leverage or business interruptions; |
n
|
Loans secured by collateral that is not readily marketable or that has experienced or is susceptible to deterioration in realizable value; and |
n
|
Loans to borrowers in industries or countries experiencing severe economic instability. |
n
|
Orderly liquidation value is the basis for collateral valuation; |
n
|
Appraisals are updated annually or more often as market conditions warrant; and |
n
|
Appraisal values are discounted in the determination of impairment if the: |
n
|
appraisal does not reflect current market conditions; or |
n
|
collateral consists of inventory, accounts receivable, or other forms of collateral that may become difficult to locate, or collect or may be subject to pilferage in a liquidation. |
September 30, 2016 |
Unpaid
Principal Balance |
Carrying
Value |
Allowance
for Loan Losses |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Commercial Banking
|
|||||||||||||||
Commercial
Finance
|
$ | 74.9 | $ | 45.1 | $ | 1.8 | |||||||||
Real Estate
Finance
|
122.1 | 76.0 | 3.8 | ||||||||||||
Consumer
& Community Banking
|
|||||||||||||||
Other Consumer
Banking
|
5.6 | 4.3 | | ||||||||||||
Legacy Consumer
Mortgages
|
3,354.3 | 2,304.8 | 8.2 | ||||||||||||
|
$ | 3,556.9 | $ | 2,430.2 | $ | 13.8 |
(1)
|
PCI loans from prior transactions were not significant and are not included. |
December 31, 2015 |
Unpaid
Principal Balance |
Carrying
Value |
Allowance
for Loan Losses |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Commercial Banking
|
|||||||||||||||
Commercial
Finance
|
$ | 115.5 | $ | 69.4 | $ | 2.5 | |||||||||
Real Estate
Finance
|
161.1 | 94.6 | 0.6 | ||||||||||||
Consumer & Community Banking
|
|||||||||||||||
Other Consumer
Banking
|
6.8 | 5.3 | | ||||||||||||
Legacy Consumer
Mortgages
|
3,693.9 | 2,526.2 | 1.8 | ||||||||||||
|
$ | 3,977.3 | $ | 2,695.5 | $ | 4.9 |
(1)
|
PCI loans from prior transactions were not significant and are not included. |
September 30, 2016
|
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(dollars in millions) |
Non-
criticized |
Criticized
|
Total
|
|||||||||||
Commercial
Finance
|
$ | 5.2 | $ | 39.9 | $ | 45.1 | ||||||||
Real Estate
Finance
|
35.9 | 40.1 | 76.0 | |||||||||||
Total
|
$ | 41.1 | $ | 80.0 | $ | 121.1 |
December 31, 2015
|
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Non-
criticized |
Criticized
|
Total
|
||||||||||||
Commercial
Finance
|
$ | 5.3 | $ | 64.1 | $ | 69.4 | ||||||||
Real Estate
Finance
|
33.2 | 61.4 | 94.6 | |||||||||||
Total
|
$ | 38.5 | $ | 125.5 | $ | 164.0 |
(dollars in millions) |
September 30, 2016
|
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Quarter
Ended |
Nine Months
Ended |
|||||||||
Beginning
Balance
|
$ | 1,274.8 | $ | 1,294.0 | ||||||
Accretion into
interest income
|
(48.4 | ) | (149.3 | ) | ||||||
Reclassification from non-accretable difference
|
35.8 | 146.2 | ||||||||
Disposals and
Other
|
(5.4 | ) | (34.1 | ) | ||||||
Balance at
September 30, 2016
|
$ | 1,256.8 | $ | 1,256.8 |
Quarter and Nine
Months Ended September 30, 2015 |
||||||
---|---|---|---|---|---|---|
Balance at
August 3, 2015
(1)
|
$ | 1,254.8 | ||||
Accretion into
interest income
|
(32.1 | ) | ||||
Reclassification from non-accretable difference
|
0.1 | |||||
Disposals and
Other
|
(5.9 | ) | ||||
Balance at
September 30, 2015
|
$ | 1,216.9 |
(1)
|
Balance at August 3, 2015 reflects reclassification of certain PCI loans and measurement period adjustments. Refer to the Companys December 31, 2015 Form 10-K for further discussion. |
n
|
Borrower is in default with CIT or other material creditor |
n
|
Borrower has declared bankruptcy |
n
|
Growing doubt about the borrowers ability to continue as a going concern |
n
|
Borrower has (or is expected to have) insufficient cash flow to service debt |
n
|
Borrower is de-listing its securities |
n
|
Borrowers inability to obtain funds from other sources |
n
|
Breach of financial covenants by the borrower. |
n
|
Assets used to satisfy debt are less than CITs recorded investment in the receivable |
n
|
Modification of terms interest rate changed to below market rate |
n
|
Maturity date extension at an interest rate less than market rate |
n
|
The borrower does not otherwise have access to funding for debt with similar risk characteristics in the market at the restructured rate and terms |
n
|
Capitalization of interest |
n
|
Increase in interest reserves |
n
|
Conversion of credit to Payment-In-Kind (PIK) |
n
|
Delaying principal and/or interest for a period of three months or more |
n
|
Partial forgiveness of the balance. |
n
|
The nature of modifications qualifying as TDRs based upon recorded investment at September 30, 2016 was comprised of payment deferrals for 14% and covenant relief and/or other for 86%. December 31, 2015 TDR recorded investment was comprised of payment deferrals for 13% and covenant relief and/or other for 87%. |
n
|
Payment deferrals result in lower net present value of cash flows, if not accompanied by additional interest or fees, and increased provision for credit losses to the extent applicable. The financial impact of these modifications is not significant given the moderate length of deferral periods; |
n
|
Interest rate reductions result in lower amounts of interest being charged to the customer, but are a relatively small part of the Companys restructuring programs. Additionally, in some instances, modifications improve the Companys economic return through increased interest rates and fees, but are reported as TDRs due to assessments regarding the borrowers ability to independently obtain similar funding in the market and assessments of the relationship between modified rates and terms and comparable market rates and terms. The weighted average change in interest rates for all TDRs occurring during the quarters ended September 30, 2016 and 2015 was not significant; |
n
|
Debt forgiveness, or the reduction in amount owed by borrower, results in incremental provision for credit losses, in the form of higher charge-offs. While these types of modifications have the greatest individual impact on the allowance, the amounts of principal forgiveness for TDRs occurring during quarters ended September 30, 2016 and 2015 was not significant, as debt forgiveness is a relatively small component of the Companys modification programs; and |
n
|
The other elements of the Companys modification programs that are not TDRs, do not have a significant impact on financial results given their relative size, or do not have a direct financial impact, as in the case of covenant changes. |
prepayments, and estimated future collateral values (determined by applying externally published market index). In addition, drivers of cash flows include:
1)
|
Mobility rates We used the actuarial estimates of contract termination using the Society of Actuaries mortality tables, adjusted for expected prepayments and relocations. |
2)
|
Home Price Appreciation Consistent with other projections from various market sources, we use the Moodys baseline forecast at a regional level to estimate home price appreciation on a loan-level basis. |
Future
Advances
(dollars in millions)
Year Ending: | ||||||
---|---|---|---|---|---|---|
2016
|
$ | 3.7 | ||||
2017
|
13.4 | |||||
2018
|
11.2 | |||||
2019
|
9.3 | |||||
2020
|
7.7 | |||||
Years 2021
2025
|
21.6 | |||||
Years 2026
2030
|
7.0 | |||||
Years 2031
2035
|
1.9 | |||||
Thereafter
|
0.5 | |||||
Total
(1)
,
(2)
|
$ | 76.3 |
(1)
|
This table does not take into consideration cash inflows including payments from mortgagors or payoffs based on contractual terms. |
(2)
|
This table includes the reverse mortgages supported by the Company as a result of the IndyMac loss-share agreements with the FDIC. As of September 30, 2016, the Company is responsible for funding up to a remaining $54 million of the total amount. Refer to Note 5 Indemnification Asset for more information on this agreement and the Companys responsibilities toward this reverse mortgage portfolio. |
Transportation
Finance |
Commercial
Banking |
Consumer &
Community Banking |
Non-Strategic
Portfolios |
Corporate
and Other |
Total
|
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Quarter Ended September 30, 2016
|
|||||||||||||||||||||||||||
Balance
June 30, 2016
|
$ | 51.3 | 327.6 | $ | 20.5 | $ | | $ | | $ | 399.4 | ||||||||||||||||
Provision for
credit losses
|
5.5 | 39.2 | 1.6 | (0.1 | ) | | 46.2 | ||||||||||||||||||||
Other
(1)
|
| (2.8 | ) | 2.3 | | | (0.5 | ) | |||||||||||||||||||
Gross
charge-offs
(2)
|
(2.1 | ) | (27.7 | ) | (0.7 | ) | | | (30.5 | ) | |||||||||||||||||
Recoveries
|
| 6.2 | 0.8 | 0.1 | | 7.1 | |||||||||||||||||||||
Balance
September 30, 2016
|
$ | 54.7 | $ | 342.5 | $ | 24.5 | $ | | $ | | $ | 421.7 | |||||||||||||||
Nine Months
Ended September 30, 2016
|
|||||||||||||||||||||||||||
Balance
December 31, 2015
|
$ | 39.4 | $ | 310.5 | $ | 10.3 | $ | | $ | | $ | 360.2 | |||||||||||||||
Provision for
credit losses
|
43.8 | 124.1 | 5.8 | (0.1 | ) | | 173.6 | ||||||||||||||||||||
Other
(1)
|
(0.2 | ) | (4.1 | ) | 7.9 | | 3.6 | ||||||||||||||||||||
Gross
charge-offs
(2)
|
(28.3 | ) | (101.5 | ) | (1.9 | ) | | | (131.7 | ) | |||||||||||||||||
Recoveries
|
| 13.5 | 2.4 | 0.1 | | 16.0 | |||||||||||||||||||||
Balance
September 30, 2016
|
$ | 54.7 | $ | 342.5 | $ | 24.5 | $ | | $ | | $ | 421.7 | |||||||||||||||
Allowance balance at September 30, 2016
|
|||||||||||||||||||||||||||
Loans
individually evaluated for impairment
|
$ | 6.8 | $ | 27.0 | $ | | $ | | $ | | $ | 33.8 | |||||||||||||||
Loans
collectively evaluated for impairment
|
47.9 | 309.9 | 16.3 | | | 374.1 | |||||||||||||||||||||
Loans acquired
with deteriorated credit quality
(3)
|
| 5.6 | 8.2 | | | 13.8 | |||||||||||||||||||||
Allowance for
loan losses
|
$ | 54.7 | $ | 342.5 | $ | 24.5 | $ | | $ | | $ | 421.7 | |||||||||||||||
Other
reserves
(1)
|
$ | 0.4 | $ | 47.1 | $ | 0.2 | $ | | $ | | $ | 47.7 | |||||||||||||||
Finance receivables at September 30, 2016
|
|||||||||||||||||||||||||||
Loans
individually evaluated for impairment
|
$ | 49.4 | $ | 127.8 | $ | | $ | | $ | | $ | 177.2 | |||||||||||||||
Loans
collectively evaluated for impairment
|
2,174.8 | 20,315.8 | 4,820.2 | | | 27,310.8 | |||||||||||||||||||||
Loans acquired
with deteriorated credit quality
(3)
|
| 121.1 | 2,309.1 | | | 2,430.2 | |||||||||||||||||||||
Ending
balance
|
$ | 2,224.2 | $ | 20,564.7 | $ | 7,129.3 | $ | | $ | | $ | 29,918.2 | |||||||||||||||
Percent of
loans to total loans
|
7.4 | % | 68.8 | % | 23.8 | % | 0 | % | 0 | % | 100 | % | |||||||||||||||
Quarter Ended September 30, 2015
|
|||||||||||||||||||||||||||
Balance
June 30, 2015
|
$ | 33.4 | $ | 277.6 | $ | | $ | 39.9 | $ | | $ | 350.9 | |||||||||||||||
Provision for
credit losses
|
(1.6 | ) | 43.2 | 5.1 | 3.2 | | 49.9 | ||||||||||||||||||||
Other
(1)
|
0.1 | (3.1 | ) | | (1.5 | ) | | (4.5 | ) | ||||||||||||||||||
Gross
charge-offs
(2)
|
(0.1 | ) | (22.8 | ) | (1.6 | ) | (42.9 | ) | | (67.4 | ) | ||||||||||||||||
Recoveries
|
| 4.3 | 0.5 | 1.3 | | 6.1 | |||||||||||||||||||||
Balance
September 30, 2015
|
$ | 31.8 | $ | 299.2 | $ | 4.0 | $ | | $ | | $ | 335.0 | |||||||||||||||
Nine Months Ended September 30, 2015
|
|||||||||||||||||||||||||||
Balance
December 31, 2014
|
$ | 26.5 | $ | 282.5 | $ | | $ | 37.4 | $ | | $ | 346.4 | |||||||||||||||
Provision for
credit losses
|
5.9 | 85.6 | 5.1 | 6.3 | | 102.9 | |||||||||||||||||||||
Other
(1)
|
0.1 | (5.9 | ) | | (2.8 | ) | | (8.6 | ) | ||||||||||||||||||
Gross
charge-offs
(2)
|
(0.8 | ) | (75.2 | ) | (1.6 | ) | (50.6 | ) | | (128.2 | ) | ||||||||||||||||
Recoveries
|
0.1 | 12.2 | 0.5 | 9.7 | | 22.5 | |||||||||||||||||||||
Balance
September 30, 2015
|
$ | 31.8 | $ | 299.2 | $ | 4.0 | $ | | $ | | $ | 335.0 |
Transportation
Finance |
Commercial
Banking |
Consumer &
Community Banking |
Non-Strategic
Portfolios |
Corporate
and Other |
Total
|
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Allowance balance at September 30, 2015
|
|||||||||||||||||||||||||||
Loans
individually evaluated for impairment
|
$ | 0.9 | $ | 17.4 | $ | | $ | | $ | | $ | 18.3 | |||||||||||||||
Loans
collectively evaluated for impairment
|
30.9 | 281.8 | 3.6 | | | 316.3 | |||||||||||||||||||||
Loans acquired
with deteriorated credit quality
(3)
|
| | 0.4 | | | 0.4 | |||||||||||||||||||||
Allowance for
loan losses
|
$ | 31.8 | $ | 299.2 | $ | 4.0 | $ | | $ | | $ | 335.0 | |||||||||||||||
Other
reserves
(1)
|
$ | | $ | 40.6 | $ | | $ | 0.2 | $ | | $ | 40.8 | |||||||||||||||
Finance receivables at September 30, 2015
|
|||||||||||||||||||||||||||
Loans
individually evaluated for impairment
|
$ | 4.7 | $ | 97.5 | $ | | $ | | $ | | $ | 102.2 | |||||||||||||||
Loans
collectively evaluated for impairment
|
3,300.8 | 21,553.3 | 4,606.8 | | | 29,460.9 | |||||||||||||||||||||
Loans acquired
with deteriorated credit quality
(3)
|
| 198.7 | 2,644.4 | | | 2,843.1 | |||||||||||||||||||||
Ending
balance
|
$ | 3,305.5 | $ | 21,849.5 | $ | 7,251.2 | $ | | $ | | $ | 32,406.2 | |||||||||||||||
Percentage of
loans to total loans
|
10.2 | % | 67.4 | % | 22.4 | % | 0 | % | 0 | % | 100 | % |
(1)
|
Other reserves represents additional credit loss reserves for unfunded lending commitments, letters of credit and for deferred purchase agreements, all of which is recorded in Other liabilities. Other also includes changes relating to loans that were charged off and reimbursed by the FDIC under the indemnification provided by the FDIC, sales and foreign currency translations. |
(2)
|
Gross charge-offs of amounts specifically reserved in prior periods that were charged directly to the Allowance for loan losses included $4 million and $27 million, for the quarter and nine months ended September 30, 2016, respectively, and $12 million and $17 million for the quarter and nine months ended September 30, 2015. The current quarter charge-offs related to Commercial Banking for all periods. The prior year quarter charge-offs related to Commercial Banking. The prior year to date charge-offs related to Commercial Banking, and Non-Strategic Portfolios. |
(3)
|
Represents loans considered impaired as part of the OneWest transaction and are accounted for under the guidance in ASC 310-30 (Loans and Debt Securities Acquired with Deteriorated Credit Quality). |
Indemnification
Assets
(dollars in millions)
September 30, 2016
|
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
IndyMac
Transaction |
La Jolla
Transaction |
Total
|
||||||||||||
Loan
indemnification
(1)
|
$ | 249.0 | $ | | $ | 249.0 | ||||||||
Reverse
mortgage indemnification
|
10.7 | | 10.7 | |||||||||||
Agency claims
indemnification
(2)
|
102.5 | | 102.5 | |||||||||||
Total
|
$ | 362.2 | $ | | $ | 362.2 | ||||||||
Receivable from
(Payable to) the FDIC
|
$ | 5.5 | $ | (1.5 | ) | $ | 4.0 |
December 31, 2015
|
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
IndyMac
Transaction |
La Jolla
Transaction |
Total
|
||||||||||||
Loan
indemnification
(1)
|
$ | 338.6 | $ | 0.3 | $ | 338.9 | ||||||||
Reverse
mortgage indemnification
|
10.3 | | 10.3 | |||||||||||
Agency claims
indemnification
(2)
|
65.6 | | 65.6 | |||||||||||
Total
|
$ | 414.5 | $ | 0.3 | $ | 414.8 | ||||||||
Receivable from
(Payable to) the FDIC
|
$ | 18.6 | $ | (1.9 | ) | $ | 16.7 |
(1)
|
As of September 30, 2016, the carrying value of the IndyMac loan indemnification decreased by $89.6 million from December 31, 2015, which is comprised of $69.1 million in claim submissions filed with the FDIC during the period and $20.5 million in other (yield and provision for credit losses adjustments). |
(2)
|
As of September 30, 2016, the carrying value of the IndyMac agency claims indemnification increased by $36.9 million from December 31, 2015, which is primarily attributable to an increase in the amount of servicing-related obligations covered by the loss share agreement related to reverse mortgage loans. |
Submission
of Qualifying Losses for Reimbursement
(dollars in millions)
September 30,
2016 |
December 31,
2015 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Unpaid
principal balance
|
$ | 3,969.0 | $ | 4,372.8 | ||||||
Cumulative
losses incurred
|
3,717.8 | 3,623.4 | ||||||||
Cumulative
claims
|
3,710.3 | 3,608.4 | ||||||||
Cumulative
reimbursement
|
884.8 | 802.6 |
Submission
of Qualifying Losses for Reimbursement
(dollars in millions)
September 30, 2016
|
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
SFR
|
Commercial
(1)
|
Total
|
||||||||||||
Unpaid
principal balance
|
$ | 1,302.3 | $ | | $ | 1,302.3 | ||||||||
Cumulative
losses incurred
|
415.1 | 9.0 | 424.1 | |||||||||||
Cumulative
claims
|
414.8 | 9.0 | 423.8 | |||||||||||
Cumulative
reimbursement
|
| | |
December 31, 2015
|
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
SFR
|
Commercial
(1)
|
Total
|
||||||||||||
Unpaid
principal balance
|
$ | 1,456.8 | $ | | $ | 1,456.8 | ||||||||
Cumulative
losses incurred
|
408.5 | 9.0 | 417.5 | |||||||||||
Cumulative
claims
|
407.2 | 9.0 | 416.2 | |||||||||||
Cumulative
reimbursement
|
| | |
(1)
|
Due to the expiration of the loss share agreement covering commercial loans in December 2014, the outstanding unpaid principal balance eligible for reimbursement is zero. As provided by the loss share agreement, the loss recoveries for commercial loans extend for three years from expiration date (December 2017). As such, the cumulative losses incurred, claim submissions and reimbursements for commercial loans are reduced by the reported recoveries. |
Submission
of Qualifying Losses for Reimbursement
(dollars in millions)
September 30, 2016
|
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
SFR
|
Commercial
(1)
|
Total
|
||||||||||||
Unpaid
principal balance
|
$ | 73.0 | $ | | $ | 73.0 | ||||||||
Cumulative
losses incurred
|
56.3 | 353.6 | 409.9 | |||||||||||
Cumulative
claims
|
56.3 | 353.6 | 409.9 | |||||||||||
Cumulative
reimbursement
|
45.0 | 282.9 | 327.9 |
December 31, 2015
|
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
SFR
|
Commercial
(1)
|
Total
|
||||||||||||
Unpaid
principal balance
|
$ | 89.3 | $ | | $ | 89.3 | ||||||||
Cumulative
losses incurred
|
56.2 | 359.5 | 415.7 | |||||||||||
Cumulative
claims
|
56.2 | 359.5 | 415.7 | |||||||||||
Cumulative
reimbursement
|
45.0 | 287.6 | 332.6 |
(1)
|
Due to the expiration of the loss share agreement covering commercial loans in March 2015, the outstanding unpaid principal balance eligible for reimbursement is zero. As provided by the loss share agreement, the loss recoveries for commercial loans extend for three years from expiration date (March 2018). As such, the cumulative losses incurred, claim submissions and reimbursements for commercial loans are reduced by the reported recoveries. |
September 30,
2016 |
December 31,
2015 |
||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Available-for-sale securities
|
|||||||||||
Debt
securities
|
$ | 2,729.2 | $ | 2,007.8 | |||||||
Equity
securities
|
34.8 | 14.3 | |||||||||
Held-to-maturity securities
|
|||||||||||
Debt
securities
(1)
|
254.4 | 300.1 | |||||||||
Securities
carried at fair value with changes recorded in net income
|
|||||||||||
Debt
securities
|
301.3 | 339.7 | |||||||||
Non-marketable investments
(2)
|
272.7 | 291.9 | |||||||||
Total
investment securities
|
$ | 3,592.4 | $ | 2,953.8 |
(1)
|
Recorded at amortized cost. |
(2)
|
Non-marketable investments include securities of the FRB and FHLB carried at cost of $253.7 million at September 30, 2016 and $263.5 million at December 31, 2015. The remaining non-marketable investments include ownership interests greater than 3% in limited partnership investments that are accounted for under the equity method, other investments carried at cost, which include qualified Community Reinvestment Act (CRA) investments, equity fund holdings and shares issued by customers during loan work out situations or as part of an original loan investment, totaling $19.0 million and $28.4 million at September 30, 2016 and December 31, 2015, respectively. |
Interest
and Dividend Income
(dollars in millions)
Quarters Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2016
|
2015
|
2016
|
2015
|
|||||||||||||||
Interest income
investments
|
$ | 19.8 | $ | 4.5 | $ | 58.8 | $ | 11.9 | ||||||||||
Interest income
interest bearing deposits
|
9.5 | 15.0 | 26.7 | 24.2 | ||||||||||||||
Dividends
investments
|
3.2 | 4.0 | 9.6 | 5.0 | ||||||||||||||
Total interest
and dividends
|
$ | 32.5 | $ | 23.5 | $ | 95.1 | $ | 41.1 |
Securities
AFS Amortized Cost and Fair Value
(dollars in millions)
Amortized
Cost |
Gross
Unrealized Gains |
Gross
Unrealized Losses |
Fair
Value |
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016
|
|||||||||||||||||||
Debt
securities AFS
|
|||||||||||||||||||
Mortgage-backed Securities
|
|||||||||||||||||||
U.S.
government agency securities
|
$ | 838.3 | $ | 5.9 | $ | (0.2 | ) | $ | 844.0 | ||||||||||
Non-agency
securities
|
495.1 | 15.8 | (0.5 | ) | 510.4 | ||||||||||||||
U.S. government
agency obligations
|
874.9 | 0.2 | (0.3 | ) | 874.8 | ||||||||||||||
U.S. Treasury
Securities
|
99.7 | 0.3 | | 100.0 | |||||||||||||||
Supranational
and foreign government securities
|
400.0 | | | 400.0 | |||||||||||||||
Total debt
securities AFS
|
2,708.0 | 22.2 | (1.0 | ) | 2,729.2 | ||||||||||||||
Equity
securities AFS
|
34.7 | 0.3 | (0.2 | ) | 34.8 | ||||||||||||||
Total
securities AFS
|
$ | 2,742.7 | $ | 22.5 | $ | (1.2 | ) | $ | 2,764.0 | ||||||||||
December 31, 2015
|
|||||||||||||||||||
Debt
securities AFS
|
|||||||||||||||||||
Mortgage-backed Securities
|
|||||||||||||||||||
U.S.
government agency securities
|
$ | 148.4 | $ | | $ | (0.9 | ) | $ | 147.5 | ||||||||||
Non-agency
securities
|
573.9 | 0.4 | (7.2 | ) | 567.1 | ||||||||||||||
U.S. government
agency obligations
|
996.8 | | (3.7 | ) | 993.1 | ||||||||||||||
Supranational
and foreign government securities
|
300.1 | | | 300.1 | |||||||||||||||
Total debt
securities AFS
|
2,019.2 | 0.4 | (11.8 | ) | 2,007.8 | ||||||||||||||
Equity
securities AFS
|
14.4 | 0.1 | (0.2 | ) | 14.3 | ||||||||||||||
Total
securities AFS
|
$ | 2,033.6 | $ | 0.5 | $ | (12.0 | ) | $ | 2,022.1 |
Securities
AFS Maturities
(dollars in millions)
September 30, 2016
|
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Amortized
Cost |
Fair
Value |
Weighted
Average Yield |
|||||||||||||
Mortgage-backed securities U.S. government agency securities
|
|||||||||||||||
Due after 10
years
|
$ | 838.3 | $ | 844.0 | 2.03 | % | |||||||||
Total
|
838.3 | 844.0 | 2.03 | % | |||||||||||
Mortgage-backed securities non-agency securities
|
|||||||||||||||
After 5 but
within 10 years
|
23.3 | 24.1 | 4.93 | % | |||||||||||
Due after 10
years
|
471.8 | 486.3 | 5.85 | % | |||||||||||
Total
|
495.1 | 510.4 | 5.81 | % | |||||||||||
U.S. government agency obligations
|
|||||||||||||||
After 1 but
within 5 years
|
874.9 | 874.8 | 1.23 | % | |||||||||||
Total
|
874.9 | 874.8 | 1.23 | % | |||||||||||
U.S. Treasury Securities
|
|||||||||||||||
After 1 but
within 5 years
|
99.7 | 100.0 | 0.93 | % | |||||||||||
Total
|
99.7 | 100.0 | 0.93 | % | |||||||||||
Supranational and foreign government securities
|
|||||||||||||||
Due within 1
year
|
400.0 | 400.0 | 0.31 | % | |||||||||||
Total
|
400.0 | 400.0 | 0.31 | % | |||||||||||
Total debt
securities available-for-sale
|
$ | 2,708.0 | $ | 2,729.2 | 2.17 | % |
Securities
AFS Gross Unrealized Loss
(dollars in millions)
September 30, 2016
|
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Less than 12 months
|
12 months or greater
|
||||||||||||||||||
Fair
Value |
Gross
Unrealized Loss |
Fair
Value |
Gross
Unrealized Loss |
||||||||||||||||
Debt
securities AFS
|
|||||||||||||||||||
Mortgage-backed
securities
|
|||||||||||||||||||
U.S.
government agency securities
|
$ | 33.0 | $ | (0.1 | ) | $ | 11.0 | $ | (0.1 | ) | |||||||||
Non-agency
securities
|
9.4 | (0.1 | ) | 29.3 | (0.4 | ) | |||||||||||||
U.S. government
agency obligations
|
174.7 | (0.3 | ) | | | ||||||||||||||
Total debt
securities AFS
|
217.1 | (0.5 | ) | 40.3 | (0.5 | ) | |||||||||||||
Equity
securities AFS
|
20.3 | (0.2 | ) | | | ||||||||||||||
Total
securities available-for-sale
|
$ | 237.4 | $ | (0.7 | ) | $ | 40.3 | $ | (0.5 | ) |
December 31, 2015
|
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Less than 12 months
|
12 months or greater
|
||||||||||||||||||
Fair
Value |
Gross
Unrealized Loss |
Fair
Value |
Gross
Unrealized Loss |
||||||||||||||||
Debt
securities AFS
|
|||||||||||||||||||
Mortgage-backed
securities
|
|||||||||||||||||||
U.S.
government agency securities
|
$ | 147.0 | $ | (0.9 | ) | $ | | $ | | ||||||||||
Non-agency
securities
|
495.5 | (7.2 | ) | | | ||||||||||||||
U.S. government
agency obligations
|
943.0 | (3.7 | ) | | | ||||||||||||||
Total debt
securities AFS
|
1,585.5 | (11.8 | ) | | | ||||||||||||||
Equity
securities AFS
|
0.2 | (0.2 | ) | | | ||||||||||||||
Total
securities available-for-sale
|
$ | 1,585.7 | $ | (12.0 | ) | $ | | $ | |
Changes
in Accretable Yield
(dollars in millions)
Quarter Ended
September 30, 2016 |
Nine Months Ended
September 30, 2016 |
|||||||
---|---|---|---|---|---|---|---|---|
Beginning
Balance
|
$ | 179.2 | $ | 189.0 | ||||
Accretion into
interest income
|
(7.1 | ) | (22.3 | ) | ||||
Reclassifications from non-accretable difference
|
0.6 | 6.0 | ||||||
Balance at
September 30, 2016
|
$ | 172.7 | $ | 172.7 |
Quarter Ended
September 30, 2015 |
Nine Months Ended
September 30, 2015 |
|||||||
---|---|---|---|---|---|---|---|---|
Beginning Balance | $ | 298.4 | $ | 298.4 | ||||
Accretion into interest income | (8.2 | ) | (8.2 | ) | ||||
Balance at September 30, 2015 | $ | 290.2 | $ | 290.2 |
Securities
Carried at Fair Value with Changes Recorded in Net Income
(dollars in millions)
Amortized
Cost |
Gross
Unrealized Gains |
Gross
Unrealized Losses |
Fair
Value |
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016
|
|||||||||||||||||||
Mortgage-backed
Securities Non-agency
|
$ | 295.9 | $ | 6.1 | $ | (0.7 | ) | $ | 301.3 | ||||||||||
Total
securities held at fair value with changes recorded in net income
|
$ | 295.9 | $ | 6.1 | $ | (0.7 | ) | $ | 301.3 |
Amortized
Cost |
Gross
Unrealized Gains |
Gross
Unrealized Losses |
Fair
Value |
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2015
|
|||||||||||||||||||
Mortgage-backed
Securities Non-agency
|
$ | 343.8 | $ | 0.3 | $ | (4.4 | ) | $ | 339.7 | ||||||||||
Total
securities held at fair value with changes recorded in net income
|
$ | 343.8 | $ | 0.3 | $ | (4.4 | ) | $ | 339.7 |
September 30, 2016
|
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Amortized
Cost |
Fair
Value |
Weighted
Average Yield |
|||||||||||||
Mortgage-backed securities non agency securities
|
|||||||||||||||
After 5 but
within 10 years
|
$ | 0.2 | $ | 0.3 | 37.26 | % | |||||||||
Due after 10
years
|
295.7 | 301.0 | 4.89 | % | |||||||||||
Total
|
$ | 295.9 | $ | 301.3 | 4.92 | % |
Debt
Securities HTM Carrying Value and Fair Value
(dollars in millions)
Carrying
Value |
Gross
Unrealized Gains |
Gross
Unrealized Losses |
Fair
Value |
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016
|
|||||||||||||||||||
Mortgage-backed securities
|
|||||||||||||||||||
U.S.
government agency securities
|
$ | 120.6 | $ | 1.9 | $ | (0.4 | ) | $ | 122.1 | ||||||||||
State and
municipal
|
27.7 | 0.1 | (0.8 | ) | 27.0 | ||||||||||||||
Foreign
government
|
2.4 | 0.1 | | 2.5 | |||||||||||||||
Corporate
foreign
|
103.7 | 6.0 | | 109.7 | |||||||||||||||
Total debt
securities held-to-maturity
|
$ | 254.4 | $ | 8.1 | $ | (1.2 | ) | $ | 261.3 | ||||||||||
December 31,
2015
|
|||||||||||||||||||
Mortgage-backed securities
|
|||||||||||||||||||
U.S.
government agency securities
|
$ | 147.2 | $ | 1.1 | $ | (2.6 | ) | $ | 145.7 | ||||||||||
State and
municipal
|
37.1 | | (1.6 | ) | 35.5 | ||||||||||||||
Foreign
government
|
13.5 | | | 13.5 | |||||||||||||||
Corporate
foreign
|
102.3 | 4.5 | | 106.8 | |||||||||||||||
Total debt
securities held-to-maturity
|
$ | 300.1 | $ | 5.6 | $ | (4.2 | ) | $ | 301.5 |
September 30, 2016
|
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Amortized
Cost |
Fair
Value |
Weighted
Average Yield |
|||||||||||||
Mortgage-backed securities U.S. government agency securities
|
|||||||||||||||
After 5 but
within 10 years
|
$ | 1.3 | $ | 1.3 | 2.22 | % | |||||||||
Due after 10
years
|
119.3 | 120.8 | 2.26 | % | |||||||||||
Total
|
120.6 | 122.1 | 2.26 | % | |||||||||||
State and municipal
|
|||||||||||||||
Due within 1
year
|
0.5 | 0.5 | 2.09 | % | |||||||||||
After 1 but
within 5 years
|
0.5 | 0.5 | 2.46 | % | |||||||||||
After 5 but
within 10 years
|
0.5 | 0.5 | 2.70 | % | |||||||||||
Due after 10
years
|
26.2 | 25.5 | 2.30 | % | |||||||||||
Total
|
27.7 | 27.0 | 2.31 | % | |||||||||||
Foreign government
|
|||||||||||||||
Due within 1
year
|
2.4 | 2.5 | 2.43 | % | |||||||||||
Total
|
2.4 | 2.5 | 2.43 | % | |||||||||||
Corporate Foreign securities
|
|||||||||||||||
After 1 but
within 5 years
|
103.7 | 109.7 | 4.28 | % | |||||||||||
Total
|
103.7 | 109.7 | 4.28 | % | |||||||||||
Total debt
securities held-to-maturity
|
$ | 254.4 | $ | 261.3 | 3.09 | % |
Debt
Securities HTM Gross Unrealized Loss
(dollars in millions)
September 30, 2016
|
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Less than 12 months
|
12 months or greater
|
||||||||||||||||||
Fair
Value |
Gross
Unrealized Loss |
Fair
Value |
Gross
Unrealized Loss |
||||||||||||||||
Mortgage-backed securities
|
|||||||||||||||||||
U.S.
government agency securities
|
$ | | $ | | $ | 30.1 | $ | (0.4 | ) | ||||||||||
State and
municipal
|
| | 22.0 | (0.8 | ) | ||||||||||||||
Total
securities held-to-maturity
|
$ | | $ | | $ | 52.1 | $ | (1.2 | ) |
December 31, 2015
|
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Less than 12 months
|
12 months or greater
|
||||||||||||||||||
Fair
Value |
Gross
Unrealized Loss |
Fair
Value |
Gross
Unrealized Loss |
||||||||||||||||
Mortgage-backed securities
|
|||||||||||||||||||
U.S.
government agency securities
|
$ | 62.2 | $ | (0.9 | ) | $ | 40.7 | $ | (1.7 | ) | |||||||||
State and
municipal
|
3.1 | (0.1 | ) | 28.2 | (1.5 | ) | |||||||||||||
Total
securities held-to-maturity
|
$ | 65.3 | $ | (1.0 | ) | $ | 68.9 | $ | (3.2 | ) |
September 30,
2016 |
December 31,
2015 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Deposits
Outstanding
|
$32,854.3
|
$32,782.2
|
||||||||
Weighted
average contractual interest rate
|
1.22%
|
1.26%
|
||||||||
Weighted
average remaining number of days to maturity
|
685
days
|
864
days
|
Nine Months Ended
September 30, 2016 |
Year Ended
December 31, 2015 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Daily average
deposits for the period
|
$32,771.4
|
$23,277.8
|
||||||||
Maximum amount
outstanding for the period
|
33,225.1
|
32,899.6
|
||||||||
Weighted
average contractual interest rate for the period
|
1.24%
|
1.45%
|
September 30, 2016
|
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Amount
|
Average Rate
|
||||||||||
Deposits no stated maturity
|
|||||||||||
Non-interest-bearing checking
|
$ | 987.1 | | ||||||||
Interest-bearing checking
|
3,074.8 | 0.55 | % | ||||||||
Money market
/ sweeps
(1)
|
6,334.9 | 0.82 | % | ||||||||
Savings
|
4,325.5 | 0.88 | % | ||||||||
Other
|
146.2 | NM | (2) | ||||||||
Total
checking and savings deposits
|
14,868.5 | ||||||||||
Certificates of
deposit, remaining contractual maturity:
|
|||||||||||
Within one
year
|
9,135.4 | 1.13 | % | ||||||||
One to two
years
|
2,689.4 | 1.44 | % | ||||||||
Two to three
years
|
1,797.8 | 2.20 | % | ||||||||
Three to four
years
|
2,150.9 | 2.24 | % | ||||||||
Four to five
years
|
783.7 | 2.41 | % | ||||||||
Over five
years
|
1,417.9 | 3.15 | % | ||||||||
Total
certificates of deposit
|
17,975.1 | ||||||||||
Premium /
discount
|
(0.7 | ) | |||||||||
Purchase
accounting adjustments
|
11.4 | ||||||||||
Total
Deposits
|
$ | 32,854.3 |
(1)
|
Includes deposit sweep arrangements related to money market and healthcare savings accounts. |
(2)
|
Not Meaningful includes certain deposits such as escrow accounts, security deposits and other similar accounts. |
Certificates
of Deposit $100 Thousand or More
(dollars in millions)
September 30,
2016 |
December 31,
2015 |
||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
U.S.
certificates of deposit:
|
|||||||||||
Three months
or less
|
$ | 1,624.0 | $ | 1,476.5 | |||||||
After three
months through six months
|
1,767.5 | 1,462.6 | |||||||||
After six
months through twelve months
|
3,482.0 | 2,687.2 | |||||||||
After twelve
months
|
7,823.0 | 9,245.8 | |||||||||
Total U.S.
certificates of deposit $100 thousand or more
|
$ | 14,696.5 | $ | 14,872.1 |
September 30, 2016
|
December 31,
2015 |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
CIT Group Inc.
|
Subsidiaries
|
Total
|
Total
(1)
|
|||||||||||||||
Senior
Unsecured
|
$ | 10,595.1 | $ | | $ | 10,595.1 | $ | 10,636.3 | ||||||||||
Secured
borrowings:
|
||||||||||||||||||
Structured
financings
|
| 3,515.4 | 3,515.4 | 4,687.9 | ||||||||||||||
FHLB
advances
|
| 2,438.2 | 2,438.2 | 3,117.6 | ||||||||||||||
Total
Borrowings
|
$ | 10,595.1 | $ | 5,953.6 | $ | 16,548.7 | $ | 18,441.8 |
(1)
|
December 31, 2015 balances for Senior Unsecured and Structured Financing were adjusted to include deferred debt issuance costs of $41.4 million and $55.9 million, respectively, compared to balances presented in the Companys Annual Report on Form 10-K for the year ended December 31, 2015, upon adoption and in accordance with the provision in ASU 2015-03. Previously these amounts were included in other assets. |
Maturity Date
|
Rate %
|
Date of Issuance
|
Par Value
|
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May
2017
|
5.000 | % |
May
2012
|
$ | 1,208.7 | |||||||||
August
2017
|
4.250 | % |
August
2012
|
1,725.8 | ||||||||||
March
2018
|
5.250 | % |
March
2012
|
1,465.0 | ||||||||||
April
2018
|
6.625 | % |
March
2011
|
695.0 | ||||||||||
February
2019
|
5.500 | % |
February
2012
|
1,750.0 | ||||||||||
February
2019
|
3.875 | % |
February
2014
|
1,000.0 | ||||||||||
May
2020
|
5.375 | % |
May
2012
|
750.0 | ||||||||||
August
2022
|
5.000 | % |
August
2012
|
1,250.0 | ||||||||||
August
2023
|
5.000 | % |
August
2013
|
750.0 | ||||||||||
Weighted
average rate and total
|
5.02 | % |
|
$ | 10,594.5 |
FHLB
Advances with Pledged Assets Summary
(dollars in millions)
September 30, 2016
|
December 31, 2015
|
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
FHLB
Advances |
Pledged
Assets |
FHLB
Advances |
Pledged
Assets |
|||||||||||||||
Total
|
$ | 2,438.2 | $ | 6,555.5 | $ | 3,117.6 | $ | 6,783.1 |
September 30, 2016
|
December 31, 2015
|
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Secured
Borrowing |
Pledged
Assets |
Secured
Borrowing |
Pledged
Assets |
|||||||||||||||
Rail
(2)
|
$ | 840.7 | $ | 1,303.7 | $ | 917.0 | $ | 1,336.1 | ||||||||||
Aerospace
(2)
|
1,864.7 | 3,516.8 | 2,091.5 | 3,732.2 | ||||||||||||||
Subtotal
Transportation Finance
|
2,705.4 | 4,820.5 | 3,008.5 | 5,068.3 | ||||||||||||||
Commercial
Finance
|
| 0.2 | | 0.2 | ||||||||||||||
Business
Capital
|
659.6 | 2,255.1 | 1,128.6 | 2,434.1 | ||||||||||||||
Subtotal
Commercial Banking
|
659.6 | 2,255.3 | 1,128.6 | 2,434.3 | ||||||||||||||
Legacy Consumer
Mortgages
|
0.4 | 0.4 | | | ||||||||||||||
Subtotal
Consumer & Community Banking
|
0.4 | 0.4 | | | ||||||||||||||
Non-Strategic
Portfolios
|
150.0 | 249.3 | 550.8 | 712.5 | ||||||||||||||
Total
|
$ | 3,515.4 | $ | 7,325.5 | $ | 4,687.9 | $ | 8,215.1 |
(1)
|
As part of our liquidity management strategy, the Company pledges assets to secure financing transactions (which include securitizations), and for other purposes as required or permitted by law while CIT Bank, N.A. also pledges assets to secure borrowings from the FHLB and FRB. |
(2)
|
At September 30, 2016, the TRS related borrowings and pledged assets, respectively, of $1.1 billion and $1.7 billion were included in Transportation Finance. The TRS is described in Note 9 Derivative Financial Instruments. |
Unconsolidated
VIEs
(dollars in millions)
Unconsolidated VIEs
Carrying Value September 30, 2016 |
Unconsolidated VIEs
Carrying Value December 31, 2015 |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Securities
|
Partnership
Investment |
Securities
|
Partnership
Investment |
|||||||||||||||
Agency
securities
(1)
|
$ | 964.6 | $ | | $ | 294.5 | $ | | ||||||||||
Non agency
securities Other servicer
|
811.6 | | 906.8 | | ||||||||||||||
Tax credit
equity investments
|
| 115.6 | | 125.0 | ||||||||||||||
Total
Assets
|
$ | 1,776.2 | $ | 115.6 | $ | 1,201.3 | $ | 125.0 | ||||||||||
Commitments to
tax credit investments
|
$ | | $ | 7.3 | $ | | $ | 15.7 | ||||||||||
Total
Liabilities
|
$ | | $ | 7.3 | $ | | $ | 15.7 | ||||||||||
Maximum loss
exposure
(2)
|
$ | 1,776.2 | $ | 115.6 | $ | 1,201.3 | $ | 125.0 |
(1)
|
In preparing the interim financial statements for the quarter ended September 30, 2016, the Company discovered and corrected an immaterial error impacting the disclosure of agency securities in the amount of $147.0 million as of December 31, 2015. |
(2)
|
Maximum loss exposure to the unconsolidated VIEs excludes the liability for representations and warranties, corporate guarantees and also excludes servicing advances. |
September 30, 2016
|
December 31, 2015
|
||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Notional
Amount |
Asset
Fair Value |
Liability
Fair Value |
Notional
Amount |
Asset
Fair Value |
Liability
Fair Value |
||||||||||||||||||||||
Qualifying Hedges
|
|||||||||||||||||||||||||||
Foreign
currency forward contracts net investment hedges
|
$ | 775.2 | $ | 8.8 | $ | (2.1 | ) | $ | 787.6 | $ | 45.5 | $ | (0.3 | ) | |||||||||||||
Total
Qualifying Hedges
|
775.2 | 8.8 | (2.1 | ) | 787.6 | 45.5 | (0.3 | ) | |||||||||||||||||||
Non-Qualifying Hedges
|
|||||||||||||||||||||||||||
Interest rate
swaps
(2)
|
5,064.8 | 104.2 | (98.8 | ) | 4,645.7 | 45.1 | (38.9 | ) | |||||||||||||||||||
Written
options
|
2,663.0 | 0.2 | (0.2 | ) | 3,346.1 | 0.1 | (2.5 | ) | |||||||||||||||||||
Purchased
options
|
2,049.1 | 0.2 | (0.2 | ) | 2,342.5 | 2.2 | (0.1 | ) | |||||||||||||||||||
Foreign
currency forward contracts
|
1,291.1 | 11.0 | (5.7 | ) | 1,624.2 | 47.8 | (6.6 | ) | |||||||||||||||||||
Total Return
Swap (TRS)
|
1,200.0 | | (47.8 | ) | 1,152.8 | | (54.9 | ) | |||||||||||||||||||
Equity
Warrants
|
1.0 | 0.1 | | 1.0 | 0.3 | | |||||||||||||||||||||
Interest Rate
Lock Commitments
|
41.6 | 0.4 | | 9.9 | 0.1 | | |||||||||||||||||||||
Forward Sale
Commitments on Agency MBS
|
24.0 | | (0.1 | ) | | | | ||||||||||||||||||||
Credit
derivatives
|
261.3 | | (0.5 | ) | 37.6 | | (0.3 | ) | |||||||||||||||||||
Total
Non-qualifying Hedges
|
12,595.9 | 116.1 | (153.3 | ) | 13,159.8 | 95.6 | (103.3 | ) | |||||||||||||||||||
Total
Hedges
|
$ | 13,371.1 | $ | 124.9 | $ | (155.4 | ) | $ | 13,947.4 | $ | 141.1 | $ | (103.6 | ) |
(1)
|
Presented on a gross basis. |
(2)
|
Fair value balances include accrued interest. |
n
|
CITs funding costs for similar financings based on current market conditions; |
n
|
Forecasted usage of the long-dated facilities through the final maturity date in 2028; and |
n
|
Forecasted amortization, due to principal payments on the underlying ABS, which impacts the amount of the unutilized portion. |
Offsetting
of Derivative Assets and Liabilities
(dollars in millions)
Gross Amounts not offset in the
Consolidated Balance Sheet |
||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Gross
Amount of Recognized Assets (Liabilities) |
Gross
Amount Offset in the Consolidated Balance Sheet |
Net Amount
Presented in the Consolidated Balance Sheet |
Derivative
Financial Instruments (1) |
Cash
Collateral Pledged/ (Received) (1),(2) |
Net
Amount |
|||||||||||||||||||||
September 30, 2016
|
||||||||||||||||||||||||||
Derivative
assets
|
$ | 124.9 | $ | | $ | 124.9 | $ | (6.3 | ) | $ | (11.9 | ) | $ | 106.7 | ||||||||||||
Derivative
liabilities
|
(155.4 | ) | | (155.4 | ) | 6.3 | 93.3 | (55.8 | ) | |||||||||||||||||
December 31, 2015
|
||||||||||||||||||||||||||
Derivative
assets
|
$ | 141.1 | $ | | $ | 141.1 | $ | (9.7 | ) | $ | (82.7 | ) | $ | 48.7 | ||||||||||||
Derivative
liabilities
|
(103.6 | ) | | (103.6 | ) | 9.7 | 31.8 | (62.1 | ) |
(1)
|
The Companys derivative transactions are governed by ISDA agreements that allow for net settlements of certain payments as well as offsetting of all contracts (Derivative Financial Instruments) with a given counterparty in the event of bankruptcy or default of one of the two parties to the transaction. We believe our ISDA agreements meet the definition of a master netting arrangement or similar agreement for purposes of the above disclosure. In conjunction with the ISDA agreements, the Company has entered into collateral arrangements with its counterparties which provide for the exchange of cash depending on change in the market valuation of the derivative contracts outstanding. Such collateral is available to be applied in settlement of the net balances upon an event of default of one of the counterparties. |
(2)
|
Collateral pledged or received is included in Other assets or Other liabilities, respectively. |
Derivative
Instrument Gains and Losses
(dollars in millions)
Quarters Ended
September 30, |
Nine Months Ended
September 30, |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Derivative Instruments
|
Gain / (Loss)
Recognized |
2016
|
2015
|
2016
|
2015
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non Qualifying Hedges
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate
swaps
|
Other
income
|
$ | 2.4 | $ | (2.2 | ) | $ | (0.6 | ) | $ | (1.1 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate
options
|
Other
income
|
0.1 | 1.2 | 0.5 | 1.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency
forward contracts
|
Other
income
|
1.4 | 43.8 | (10.9 | ) | 84.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity
warrants
|
Other
income
|
0.1 | | (0.2 | ) | 0.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Return
Swap (TRS)
|
Other
income
|
(19.7 | ) | (24.3 | ) | 7.1 | (31.7 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Rate
Lock Commitments
|
Other
income
|
0.2 | | 0.3 | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forward Sale
Commitments on Agency MBS
|
Other
income
|
(0.1 | ) | | (0.1 | ) | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit
Derivatives
|
Other
income
|
0.2 | | 1.4 | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total
Non-qualifying Hedges
|
|
$ | (15.4 | ) | $ | 18.5 | $ | (2.5 | ) | $ | 52.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total
derivatives-income statement impact
|
|
$ | (15.4 | ) | $ | 18.5 | $ | (2.5 | ) | $ | 52.9 |
Contract Type
|
Derivatives -
effective portion reclassified from AOCI to income |
Hedge
ineffectiveness recorded directly in income |
Total
income statement impact |
Derivatives -
effective portion recorded in OCI |
Total
change in OCI for period |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Quarter Ended September 30, 2016
|
|||||||||||||||||||||||
Foreign
currency forward contracts net investment hedges
|
$ | | $ | | $ | | $ | 4.2 | $ | 4.2 | |||||||||||||
Total
|
$ | | $ | | $ | | $ | 4.2 | $ | 4.2 | |||||||||||||
Quarter
Ended September 30, 2015
|
|||||||||||||||||||||||
Foreign
currency forward contracts net investment hedges
|
$ | 4.3 | $ | | $ | 4.3 | $ | 44.0 | $ | 39.7 | |||||||||||||
Total
|
$ | 4.3 | $ | | $ | 4.3 | $ | 44.0 | $ | 39.7 | |||||||||||||
Nine Months
Ended September 30, 2016
|
|||||||||||||||||||||||
Foreign
currency forward contracts net investment hedges
|
$ | 1.8 | $ | | $ | 1.8 | $ | (28.1 | ) | $ | (29.9 | ) | |||||||||||
Total
|
$ | 1.8 | $ | | $ | 1.8 | $ | (28.1 | ) | $ | (29.9 | ) | |||||||||||
Nine Months
Ended September 30, 2015
|
|||||||||||||||||||||||
Foreign
currency forward contracts net investment hedges
|
$ | 8.5 | $ | | $ | 8.5 | $ | 106.3 | $ | 97.8 | |||||||||||||
Total
|
$ | 8.5 | $ | | $ | 8.5 | $ | 106.3 | $ | 97.8 |
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016
|
|||||||||||||||||||
Assets
|
|||||||||||||||||||
Debt Securities
AFS
|
$ | 2,729.2 | $ | | $ | 2,218.8 | $ | 510.4 | |||||||||||
Securities
carried at fair value with changes recorded in net income
|
301.3 | | | 301.3 | |||||||||||||||
Equity
Securities AFS
|
34.8 | 0.2 | 34.6 | | |||||||||||||||
FDIC
receivable
|
49.3 | | | 49.3 | |||||||||||||||
Derivative
assets at fair value non-qualifying hedges
(1)
|
116.1 | | 115.7 | 0.4 | |||||||||||||||
Derivative
assets at fair value qualifying hedges
|
8.8 | | 8.8 | | |||||||||||||||
Total
|
$ | 3,239.5 | $ | 0.2 | $ | 2,377.9 | $ | 861.4 | |||||||||||
Liabilities
|
|||||||||||||||||||
Derivative
liabilities at fair value non-qualifying hedges
(1)
|
$ | (153.3 | ) | $ | | $ | (105.0 | ) | $ | (48.3 | ) | ||||||||
Derivative
liabilities at fair value qualifying hedges
|
(2.1 | ) | | (2.1 | ) | | |||||||||||||
Consideration
holdback liability
|
(47.0 | ) | | | (47.0 | ) | |||||||||||||
FDIC True-up
Liability
|
(61.3 | ) | | | (61.3 | ) | |||||||||||||
Total
|
$ | (263.7 | ) | $ | | $ | (107.1 | ) | $ | (156.6 | ) | ||||||||
December 31, 2015
|
|||||||||||||||||||
Assets
|
|||||||||||||||||||
Debt Securities
AFS
|
$ | 2,007.8 | $ | | $ | 1,440.7 | $ | 567.1 | |||||||||||
Securities
carried at fair value with changes recorded in net income
|
339.7 | | | 339.7 | |||||||||||||||
Equity
Securities AFS
(2)
|
14.3 | 0.3 | 14.0 | | |||||||||||||||
FDIC
receivable
|
54.8 | | | 54.8 | |||||||||||||||
Derivative
assets at fair value non-qualifying hedges
(1)
|
95.6 | | 95.6 | | |||||||||||||||
Derivative
assets at fair value qualifying hedges
|
45.5 | | 45.5 | | |||||||||||||||
Total
|
$ | 2,557.7 | $ | 0.3 | $ | 1,595.8 | $ | 961.6 | |||||||||||
Liabilities
|
|||||||||||||||||||
Derivative
liabilities at fair value non-qualifying hedges
(1)
|
$ | (103.3 | ) | $ | | $ | (47.8 | ) | $ | (55.5 | ) | ||||||||
Derivative
liabilities at fair value qualifying hedges
|
(0.3 | ) | | (0.3 | ) | | |||||||||||||
Consideration
holdback liability
|
(60.8 | ) | | | (60.8 | ) | |||||||||||||
FDIC True-up
Liability
|
(56.9 | ) | | | (56.9 | ) | |||||||||||||
Total
|
$ | (221.3 | ) | $ | | $ | (48.1 | ) | $ | (173.2 | ) |
(1)
|
Derivative fair values include accrued interest |
Financial Instrument |
Estimated
Fair Value |
Valuation
Technique(s) |
Significant
Unobservable Inputs |
Range of
Inputs |
Weighted
Average |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016
|
|||||||||||||||||||||||
Assets
|
|||||||||||||||||||||||
Securities
AFS
|
$ | 510.4 |
Discounted cash flow
|
Discount Rate
|
2.7% 81.4%
|
5.3%
|
|||||||||||||||||
|
|
Prepayment Rate
|
1.7% 20.6%
|
9.1%
|
|||||||||||||||||||
|
|
Default Rate
|
0.0% 12.8%
|
4.1%
|
|||||||||||||||||||
|
|
Loss Severity
|
0.2% 75.2%
|
36.1%
|
|||||||||||||||||||
Securities
carried at fair value with changes recorded in net income
|
301.3 |
Discounted cash flow
|
Discount Rate
|
0.0% 37.8%
|
5.4%
|
||||||||||||||||||
|
|
Prepayment Rate
|
5.4% 35.8%
|
11.9%
|
|||||||||||||||||||
|
|
Default Rate
|
0.0% 6.3%
|
4.0%
|
|||||||||||||||||||
|
|
Loss Severity
|
7.3% 42.9%
|
24.7%
|
|||||||||||||||||||
FDIC
Receivable
|
49.3 |
Discounted cash flow
|
Discount Rate
|
7.8% 18.4%
|
9.4%
|
||||||||||||||||||
|
|
Prepayment Rate
|
2.0% 14.0%
|
3.2%
|
|||||||||||||||||||
|
|
Default Rate
|
6.0% 36.0%
|
10.5%
|
|||||||||||||||||||
|
|
Loss Severity
|
21.6% 53.2%
|
29.2%
|
|||||||||||||||||||
Derivative assets
non qualifying
|
0.4 |
Internal valuation model
|
Borrower Rate
|
2.9% 4.5%
|
3.6%
|
||||||||||||||||||
Total
Assets
|
$ | 861.4 | |||||||||||||||||||||
Liabilities
|
|
|
|
|
|||||||||||||||||||
FDIC True-up
liability
|
$ | (61.3 | ) |
Discounted cash flow
|
Discount Rate
|
3.2 % 3.2%
|
3.2%
|
||||||||||||||||
Consideration
holdback liability
|
(47.0 | ) |
Discounted cash flow
|
Payment Probability
|
0.0% 100.0%
|
53.8%
|
|||||||||||||||||
|
|
Discount Rate
|
1.3% 4.0%
|
2.2%
|
|||||||||||||||||||
Derivative
liabilities non qualifying
|
(48.3 | ) |
Market Comparables
(1)
|
|
|
|
|||||||||||||||||
Total
Liabilities
|
$ | (156.6 | ) |
Financial Instrument |
Estimated
Fair Value |
Valuation
Technique(s) |
Significant
Unobservable Inputs |
Range of
Inputs |
Weighted
Average |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31,
2015
|
|
|
|
|
||||||||||||||||||
Assets
|
||||||||||||||||||||||
Securities
AFS
|
$ | 567.1 |
Discounted cash flow
|
Discount Rate
|
0.0% 94.5%
|
6.4%
|
||||||||||||||||
|
|
Prepayment Rate
|
2.7% 20.8%
|
9.2%
|
||||||||||||||||||
|
|
Default Rate
|
0.0% 9.5%
|
4.1%
|
||||||||||||||||||
|
|
Loss Severity
|
0.2% 83.5%
|
36.4%
|
||||||||||||||||||
Securities
carried at fair value with changes recorded in net income
|
339.7 |
Discounted cash flow
|
Discount Rate
|
0.0% 19.9%
|
6.3%
|
|||||||||||||||||
|
|
Prepayment Rate
|
2.5% 22.4%
|
11.5%
|
||||||||||||||||||
|
|
Default Rate
|
0.0% 5.9%
|
4.1%
|
||||||||||||||||||
|
|
Loss Severity
|
3.8% 39.0%
|
25.1%
|
||||||||||||||||||
FDIC
Receivable
|
54.8 |
Discounted cash flow
|
Discount Rate
|
7.8% 18.4%
|
9.4%
|
|||||||||||||||||
|
|
Prepayment Rate
|
2.0% 14.0%
|
3.6%
|
||||||||||||||||||
|
|
Default Rate
|
6.0% 36.0%
|
10.8%
|
||||||||||||||||||
|
|
Loss Severity
|
20.0% 65.0%
|
31.6%
|
||||||||||||||||||
Total
Assets
|
$ | 961.6 |
|
|
|
|
||||||||||||||||
Liabilities
|
||||||||||||||||||||||
FDIC True-up
liability
|
$ | (56.9 | ) |
Discounted cash flow
|
Discount Rate
|
4.1 % 4.1%
|
4.1%
|
|||||||||||||||
Consideration
holdback liability
|
(60.8 | ) |
Discounted cash flow
|
Payment Probability
|
0% 100%
|
53.8%
|
||||||||||||||||
|
|
Discount Rate
|
3.0% 3.0%
|
3.0%
|
||||||||||||||||||
Derivative
liabilities non qualifying
|
(55.5 | ) |
Market Comparables
(1)
|
|
||||||||||||||||||
Total
Liabilities
|
$ | (173.2 | ) |
|
|
|
|
(1)
|
The valuation of these derivatives is primarily related to the GSI facilities which is based on several factors using a discounted cash flow methodology, including a) funding costs for similar financings based on current market conditions; b) forecasted usage of long-dated facilities through the final maturity date in 2028; and c) forecasted amortization, due to principal payments on the underlying ABS, which impacts the amount of the unutilized portion. |
n
|
Discounted cash flow Discounted cash flow valuation techniques generally consist of developing an estimate of future cash flows that are expected to occur over the life of an instrument and then discounting those cash flows at a rate of return that results in the estimated fair value amount. The Company utilizes both the direct and indirect valuation methods. Under the direct method, contractual cash flows are adjusted for expected losses. The adjusted cash flows are discounted at a rate which considers other costs and risks, such as market risk and liquidity. Under the indirect method, contractual cash flows are discounted at a rate which reflects the costs and risks associated with the likelihood of generating the contractual cash flows. |
n
|
Market comparables Market comparable(s) pricing valuation techniques are used to determine the estimated fair value of certain instruments by incorporating known inputs such as recent transaction prices, pending transactions, or prices of other similar investments which require significant adjustment to reflect differences in instrument characteristics. |
n
|
Internal valuation model The internal model for rate lock valuation uses the spread on borrower mortgage rate and the Fannie Mae pass through rate and applies a conversion factor to assess the derivative value. |
n
|
Default rate is an estimate of the likelihood of not collecting contractual amounts owed expressed as a constant default rate. |
n
|
Discount rate is a rate of return used to present value the future expected cash flows to arrive at the estimated fair value of an instrument. The discount rate consists of a benchmark rate component and a risk premium component. The benchmark rate component, for example, LIBOR or U.S. Treasury rates, is generally observable within the market and is necessary to appropriately reflect the time value of money. The risk premium component reflects the amount of compensation market participants require due to the uncertainty inherent in the instruments cash flows resulting from risks such as credit and liquidity. |
n
|
Loss severity is the percentage of contractual cash flows lost in the event of a default. |
n
|
Prepayment rate is the estimated rate at which forecasted prepayments of principal of the related loan or debt instrument are expected to occur, expressed as a constant prepayment rate (CPR). |
n
|
Payment Probability is an estimate of the likelihood the consideration holdback amount will be required to be paid expressed as a percentage. |
n
|
Borrower rate Mortgage rate committed to the borrower by CIT Bank. Effective for up to 90 days. |
Securities-
AFS |
Securities
carried at fair value with changes recorded in net income |
FDIC
Receivable |
Derivative
assets- non qualifying (1) |
Derivative
liabilities- non- qualifying (2) |
FDIC
True-up Liability |
Consideration
holdback Liability |
||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31,
2015
|
$ | 567.1 | $ | 339.7 | $ | 54.8 | $ | | $ | (55.5 | ) | $ | (56.9 | ) | $ | (60.8 | ) | |||||||||||||
Included in
earnings
|
(4.6 | ) | 11.6 | 4.8 | 0.4 | 7.2 | (4.4 | ) | (0.5 | ) | ||||||||||||||||||||
Included in
comprehensive income
|
22.1 | | | | | | | |||||||||||||||||||||||
Impairment
|
(2.2 | ) | | | | | | | ||||||||||||||||||||||
Settlements
|
(72.0 | ) | (50.0 | ) | (10.3 | ) | | | | 14.3 | ||||||||||||||||||||
Balance as
of September 30, 2016
|
$ | 510.4 | $ | 301.3 | $ | 49.3 | $ | 0.4 | $ | (48.3 | ) | $ | (61.3 | ) | $ | (47.0 | ) | |||||||||||||
December 31,
2014
|
$ | | $ | | $ | | $ | | $ | (26.6 | ) | $ | | $ | | |||||||||||||||
Included in
earnings
|
(0.2 | ) | | 0.7 | | (30.5 | ) | | | |||||||||||||||||||||
Included in
comprehensive income
|
(10.9 | ) | | | | | | | ||||||||||||||||||||||
Purchases
|
992.8 | | 54.8 | | | (56.3 | ) | (60.8 | ) | |||||||||||||||||||||
Settlements
|
(29.2 | ) | | (1.3 | ) | | | | | |||||||||||||||||||||
Balance as
of September 30, 2015
|
$ | 952.5 | $ | | $ | 54.2 | $ | | $ | (57.1 | ) | $ | (56.3 | ) | $ | (60.8 | ) |
(1)
|
Valuation of Interest Rate Lock Commitments. |
(2)
|
Primarily includes the valuation of the derivatives related to the TRS facilities and written options on certain CIT Bank CDs. |
Fair Value Level at Reporting Date
|
|||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total
Carrying Value |
Level 1
|
Level 2
|
Level 3
|
Total
(Losses) |
|||||||||||||||||||
Assets
|
|||||||||||||||||||||||
September
30, 2016
|
|||||||||||||||||||||||
Assets held for
sale
|
$ | 1,598.0 | $ | | $ | 3.7 | $ | 1,594.3 | $ | (41.2 | ) | ||||||||||||
Other real
estate owned and repossessed assets
|
88.7 | | | 88.7 | (5.8 | ) | |||||||||||||||||
Impaired
loans
|
125.6 | | | 125.6 | (20.0 | ) | |||||||||||||||||
Total
|
$ | 1,812.3 | $ | | $ | 3.7 | $ | 1,808.6 | $ | (67.0 | ) | ||||||||||||
December 31,
2015
|
|||||||||||||||||||||||
Assets held for
sale
|
$ | 1,648.3 | $ | | $ | 31.0 | $ | 1,617.3 | $ | (32.0 | ) | ||||||||||||
Other real
estate owned and repossessed assets
|
127.3 | | | 127.3 | (5.7 | ) | |||||||||||||||||
Impaired
loans
|
127.6 | | | 127.6 | (21.9 | ) | |||||||||||||||||
Total
|
$ | 1,903.2 | $ | | $ | 31.0 | $ | 1,872.2 | $ | (59.6 | ) |
FDIC
Receivable
(dollars in millions)
September 30, 2016
|
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Estimated Fair
Value Carrying Amount |
Aggregate
Unpaid Principal |
Difference Between Estimated
Fair Value and Aggregate Unpaid Principal Balance |
||||||||||||
FDIC
Receivable
|
$ | 49.3 | $ | 178.8 | $ | 129.4 |
December 31, 2015
|
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Estimated Fair
Value Carrying Amount |
Aggregate
Unpaid Principal |
Difference Between Estimated
Fair Value and Aggregate Unpaid Principal Balance |
||||||||||||
FDIC
Receivable
|
$ | 54.8 | $ | 204.5 | $ | 149.7 |
Estimated Fair Value
|
|||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Carrying
Value |
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||||||||
September 30, 2016
|
|||||||||||||||||||||||
Financial Assets
|
|||||||||||||||||||||||
Cash and
interest bearing deposits
|
$ | 7,433.6 | $ | 7,433.6 | $ | | $ | | $ | 7,433.6 | |||||||||||||
Derivative
assets at fair value non-qualifying hedges
|
116.1 | | 115.7 | 0.4 | 116.1 | ||||||||||||||||||
Derivative
assets at fair value qualifying hedges
|
8.8 | | 8.8 | | 8.8 | ||||||||||||||||||
Assets held for
sale (excluding leases)
|
1,125.3 | | 164.5 | 968.4 | 1,132.9 | ||||||||||||||||||
Loans
(excluding leases)
|
27,084.5 | | 430.0 | 26,431.0 | 26,861.0 | ||||||||||||||||||
Investment
securities
(1)
|
3,592.4 | 0.2 | 2,446.6 | 1,152.5 | 3,599.3 | ||||||||||||||||||
Indemnification
assets
(2)
|
259.7 | | | 215.8 | 215.8 | ||||||||||||||||||
Other assets
subject to fair value disclosure and unsecured counterparty receivables
(3)
|
1,094.9 | | | 1,094.9 | 1,094.9 | ||||||||||||||||||
Financial
Liabilities
|
|||||||||||||||||||||||
Deposits
(4)
|
(32,883.7 | ) | | | (33,145.8 | ) | (33,145.8 | ) | |||||||||||||||
Derivative
liabilities at fair value non-qualifying hedges
|
(153.3 | ) | | (105.0 | ) | (48.3 | ) | (153.3 | ) | ||||||||||||||
Derivative
liabilities at fair value qualifying hedges
|
(2.1 | ) | | (2.1 | ) | | (2.1 | ) | |||||||||||||||
Borrowings
(4)
|
(16,667.8 | ) | | (15,214.2 | ) | (2,069.0 | ) | (17,283.2 | ) | ||||||||||||||
Credit balances
of factoring clients
|
(1,228.9 | ) | | | (1,228.9 | ) | (1,228.9 | ) | |||||||||||||||
Other
liabilities subject to fair value disclosure
(5)
|
(1,973.2 | ) | | | (1,973.2 | ) | (1,973.2 | ) | |||||||||||||||
December 31,
2015
|
|||||||||||||||||||||||
Financial
Assets
|
|||||||||||||||||||||||
Cash and
interest bearing deposits
|
$ | 8,301.5 | $ | 8,301.5 | $ | | $ | | $ | 8,301.5 | |||||||||||||
Derivative
assets at fair value non-qualifying hedges
|
95.6 | | 95.6 | | 95.6 | ||||||||||||||||||
Derivative
assets at fair value qualifying hedges
|
45.5 | | 45.5 | | 45.5 | ||||||||||||||||||
Assets held for
sale (excluding leases)
|
738.8 | 21.8 | 55.8 | 669.1 | 746.7 | ||||||||||||||||||
Loans
(excluding leases)
|
28,244.2 | | 975.5 | 26,509.1 | 27,484.6 | ||||||||||||||||||
Investment
securities
(1)
|
2,953.8 | 11.5 | 1,678.7 | 1,265.0 | 2,955.2 | ||||||||||||||||||
Indemnification
assets
(2)
|
348.4 | | | 323.2 | 323.2 | ||||||||||||||||||
Other assets
subject to fair value disclosure and unsecured counterparty receivables
(3)
|
1,004.5 | | | 1,004.5 | 1,004.5 | ||||||||||||||||||
Financial
Liabilities
|
|||||||||||||||||||||||
Deposits
(4)
|
(32,813.8 | ) | | | (32,972.2 | ) | (32,972.2 | ) | |||||||||||||||
Derivative
liabilities at fair value non-qualifying hedges
|
(103.3 | ) | | (47.8 | ) | (55.5 | ) | (103.3 | ) | ||||||||||||||
Derivative
counterparty liabilities at fair value
|
(0.3 | ) | | (0.3 | ) | | (0.3 | ) | |||||||||||||||
Borrowings
(4)
|
(18,717.1 | ) | | (16,358.2 | ) | (2,808.8 | ) | (19,167.0 | ) | ||||||||||||||
Credit balances
of factoring clients
|
(1,344.0 | ) | | | (1,344.0 | ) | (1,344.0 | ) | |||||||||||||||
Other
liabilities subject to fair value disclosure
(5)
|
(1,943.5 | ) | | | (1,943.5 | ) | (1,943.5 | ) |
(1)
|
Level 3 estimated fair value at September 30, 2016, includes debt securities AFS ($510.4 million), securities carried at fair value with changes recorded in net income ($301.3 million), non-marketable investments ($272.7 million), and debt securities HTM ($68.1 million). Level 3 estimated fair value at December 31, 2015 included debt securities AFS ($567.1 million), debt securities carried at fair value with changes recorded in net income ($339.7 million), non-marketable investments ($291.9 million), and debt securities HTM ($66.3 million). |
(2)
|
The indemnification assets at September 30, 2016, included in the above table does not include Agency claims indemnification ($102.5 million), as they are not considered financial instruments. The indemnification assets at December 31, 2015 included in the above table does not include Agency claims indemnification ($65.6 million) and Loan indemnification ($0.7 million), as they are not considered financial instruments. |
(3)
|
Other assets subject to fair value disclosure primarily include accrued interest receivable and miscellaneous receivables. These assets have carrying values that approximate fair value generally due to the short-term nature and are classified as Level 3. The unsecured counterparty receivables primarily consist of amounts owed to CIT from GSI for debt discount, return of collateral posted to GSI and settlements resulting from market value changes to asset-backed securities underlying the TRS. |
(4)
|
Deposits and borrowings include accrued interest, which is included in Other liabilities in the Balance Sheet. |
(5)
|
Other liabilities subject to fair value disclosure include accounts payable, accrued liabilities, customer security and maintenance deposits and miscellaneous liabilities. The fair value of these approximate carrying value and are classified as level 3. |
n
|
Commercial and Consumer Loans Of the loan balance above, $430.0 million and $975.5 million at September 30, 2016 and December 31, 2015, respectively, were valued using Level 2 inputs. As there is no liquid secondary market for the other loans in the Companys portfolio, the fair value is estimated based on discounted cash flow analyses which use Level 3 inputs at both September 30, 2016 and December 31, 2015. In addition to the characteristics of the underlying contracts, key inputs to the analysis include interest rates, prepayment rates, and credit spreads. For the commercial loan portfolio, the market based credit spread inputs are derived from instruments with comparable credit risk characteristics obtained from independent third party vendors. As these Level 3 unobservable inputs are specific to individual loans/collateral types, management does not believe that sensitivity analysis of individual inputs is meaningful, but rather that sensitivity is more meaningfully assessed through the evaluation of aggregate carrying values of the loans. The fair value of loans at September 30, 2016 was $26.9 billion, which was 99.2% of carrying value. The fair value of loans at December 31, 2015 was $27.5 billion, which was 97.3% of carrying value. |
n
|
Impaired Loans The value of impaired loans is estimated using the fair value of collateral (on an orderly liquidation basis) if the loan is collateralized, the present value of expected cash flows utilizing the current market rate for such loan, or observable market price. As these Level 3 unobservable inputs are specific to individual loans/collateral types, management does not believe that sensitivity analysis of individual inputs is meaningful, but rather that sensitivity is more meaningfully assessed through the evaluation of aggregate carrying values of impaired loans relative to contractual amounts owed (unpaid principal balance or UPB) from customers. As of September 30, 2016, the UPB related to impaired loans totaled $205.1 million. Including related allowances, these loans are carried at $143.4 million, or 69.9% of UPB. Of these amounts, $40.9 million and $20.3 million of UPB and carrying value, respectively, relate to loans with no specific allowance. As of December 31, 2015 the UPB related to impaired loans totaled $172.5 million and including related allowances, these loans were carried at $121.8 million, or 70.6% of UPB. Of these amounts, $33.3 million and $21.9 million of UPB and carrying value, respectively, relate to loans with no specific allowance. The difference between UPB and carrying value reflects cumulative charge-offs on accounts |
|
remaining in process of collection, FSA discounts and allowances. See Note 3 Loans for more information. |
n
|
PCI loans These loans are valued by grouping the loans into performing and non-performing groups and stratifying the loans based on common risk characteristics such as product type, FICO score and other economic attributes. Due to a lack of observable market data, the estimated fair value of these loan portfolios was based on an internal model using unobservable inputs, including discount rates, prepayment rates, delinquency roll-rates, and loss severities. Due to the significance of the unobservable inputs, these instruments are classified as Level 3. |
n
|
Jumbo Mortgage Loans The estimated fair value was determined by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Due to the unobservable nature of the inputs used in deriving the estimated fair value of these instruments, these loans are classified as Level 3. |
n
|
Unsecured debt Approximately $10.6 billion par value at September 30, 2016 and $10.7 billion par value at December 31, 2015 were valued using market inputs, which are Level 2 inputs. |
n
|
Secured borrowings The title has been conformed to the presentation in Note 8 Borrowings , whereby secured borrowings includes both structured financings and FHLB Advances. Approximately $4.0 billion par value at September 30, 2016 and $5.1 billion par value at December 31, 2015 were valued using market inputs, which are Level 2 inputs. Where market estimates were not available for approximately $2.0 billion and $2.7 billion par value at September 30, 2016 and December 31, 2015, respectively, values were estimated using a discounted cash flow analysis with a discount rate approximating current market rates for issuances by CIT of similar debt, which are Level 3 inputs. Included in the above, the estimated fair value of FHLB Advances is based on a discounted cash flow model that utilizes benchmark interest rates and other observable market inputs. The discounted cash flow model uses the contractual advance features to determine the cash flows with a zero spread to the forward FHLB curve, which are discounted using observable benchmark interest rates. As the model inputs can be observed in a liquid market and the model does not require significant judgment, FHLB advances are classified as Level 2. |
Components
of Accumulated Other Comprehensive Loss
(dollars in millions)
September 30, 2016
|
December 31, 2015
|
|||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Gross
Unrealized |
Income
Taxes |
Net
Unrealized |
Gross
Unrealized |
Income
Taxes |
Net
Unrealized |
|||||||||||||||||||||
Foreign
currency translation adjustments
|
$ | (26.8 | ) | $ | (22.6 | ) | $ | (49.4 | ) | $ | (29.8 | ) | $ | (35.9 | ) | $ | (65.7 | ) | ||||||||
Changes in
benefit plan net gain (loss) and prior service (cost)/credit
|
(75.0 | ) | 7.0 | (68.0 | ) | (76.3 | ) | 7.0 | (69.3 | ) | ||||||||||||||||
Unrealized net
gains (losses) on available for sale securities
|
21.3 | (8.1 | ) | 13.2 | (11.4 | ) | 4.3 | (7.1 | ) | |||||||||||||||||
Total
accumulated other comprehensive loss
|
$ | (80.5 | ) | $ | (23.7 | ) | $ | (104.2 | ) | $ | (117.5 | ) | $ | (24.6 | ) | $ | (142.1 | ) |
Foreign
currency translation adjustments |
Changes in
benefit plan net gain (loss) and prior service (cost) credit |
Unrealized net
gains (losses) on available for sale securities |
Total AOCI
|
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance as of
December 31, 2015
|
$ | (65.7 | ) | $ | (69.3 | ) | $ | (7.1 | ) | $ | (142.1 | ) | ||||||
AOCI activity
before reclassifications
|
11.6 | (0.2 | ) | 20.3 | 31.7 | |||||||||||||
Amounts
reclassified from AOCI
|
4.7 | 1.5 | | 6.2 | ||||||||||||||
Net current
period AOCI
|
16.3 | 1.3 | 20.3 | 37.9 | ||||||||||||||
Balance as of
September 30, 2016
|
$ | (49.4 | ) | $ | (68.0 | ) | $ | 13.2 | $ | (104.2 | ) | |||||||
Balance as of
December 31, 2014
|
$ | (75.4 | ) | $ | (58.5 | ) | $ | | $ | (133.9 | ) | |||||||
AOCI activity
before reclassifications
|
(55.6 | ) | (1.7 | ) | (5.9 | ) | (63.2 | ) | ||||||||||
Amounts
reclassified from AOCI
|
22.2 | 0.6 | | 22.8 | ||||||||||||||
Net current
period AOCI
|
(33.4 | ) | (1.1 | ) | (5.9 | ) | (40.4 | ) | ||||||||||
Balance as of
September 30, 2015
|
$ | (108.8 | ) | $ | (59.6 | ) | $ | (5.9 | ) | $ | (174.3 | ) |
Quarters Ended September 30,
|
||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2016
|
2015
|
|||||||||||||||||||||||||||||
Gross
Amount |
Tax
|
Net
Amount |
Gross
Amount |
Tax
|
Net
Amount |
Income
Statement line item |
||||||||||||||||||||||||
Foreign
currency translation adjustments gains (losses)
|
$ | | $ | | $ | | $ | 19.2 | $ | (0.4 | ) | $ | 18.8 |
Other
Income |
||||||||||||||||
Changes in
benefit plan net gain/(loss) and prior service (cost)/credit gains (losses)
|
0.1 | | 0.1 | 0.7 | (0.2 | ) | 0.5 |
Operating
Expenses |
||||||||||||||||||||||
Total
Reclassifications out of AOCI
|
$ | 0.1 | $ | | $ | 0.1 | $ | 19.9 | $ | (0.6 | ) | $ | 19.3 |
Nine Months Ended September 30,
|
||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2016
|
2015
|
|||||||||||||||||||||||||||||
Gross
Amount |
Tax
|
Net
Amount |
Gross
Amount |
Tax
|
Net
Amount |
Income
Statement line item |
||||||||||||||||||||||||
Foreign
currency translation adjustments gains (losses)
|
$ | 3.6 | $ | 1.1 | $ | 4.7 | $ | 22.6 | $ | (0.4 | ) | $ | 22.2 |
Other
Income |
||||||||||||||||
Changes in
benefit plan net gain/(loss) and prior service (cost)/credit gains (losses)
|
1.7 | (0.2 | ) | 1.5 | 0.9 | (0.3 | ) | 0.6 |
Operating
Expenses |
|||||||||||||||||||||
Total
Reclassifications out of AOCI
|
$ | 5.3 | $ | 0.9 | $ | 6.2 | $ | 23.5 | $ | (0.7 | ) | $ | 22.8 |
CIT
|
CIT Bank, N.A.
|
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
December 31,
2015 |
September 30,
2016 |
December 31,
2015 |
||||||||||||||||
Tier 1
Capital
|
|||||||||||||||||||
Total
stockholders equity
(1)
|
$ | 11,237.0 | $ | 10,978.1 | $ | 5,535.1 | $ | 5,606.4 | |||||||||||
Effect of
certain items in accumulated other comprehensive loss excluded from Tier 1 Capital and qualifying noncontrolling interests
|
55.3 | 76.9 | (13.3 | ) | 7.0 | ||||||||||||||
Adjusted
total equity
|
11,292.3 | 11,055.0 | 5,521.8 | 5,613.4 | |||||||||||||||
Less:
Goodwill
(2)
|
(1,099.8 | ) | (1,130.8 | ) | (810.3 | ) | (830.8 | ) | |||||||||||
Disallowed
deferred tax assets
|
(804.4 | ) | (904.5 | ) | | | |||||||||||||
Disallowed
intangible assets
(2)
|
(71.3 | ) | (53.6 | ) | (83.1 | ) | (58.3 | ) | |||||||||||
Other Tier 1
components
(3)
|
(5.8 | ) | (0.1 | ) | | | |||||||||||||
Common
Equity Tier 1 Capital
|
9,311.0 | 8,966.0 | 4,628.4 | 4,724.3 | |||||||||||||||
Tier 1
Capital
|
9,311.0 | 8,966.0 | 4,628.4 | 4,724.3 | |||||||||||||||
Tier 2
Capital
|
|||||||||||||||||||
Qualifying
allowance for credit losses
and other reserves (4) |
469.3 | 403.3 | 439.5 | 374.7 | |||||||||||||||
Other Tier 2
components
(5)
|
| | 0.1 | | |||||||||||||||
Total
qualifying capital
|
$ | 9,780.3 | $ | 9,369.3 | $ | 5,068.0 | $ | 5,099.0 | |||||||||||
Risk-weighted
assets
|
$ | 66,802.2 | $ | 69,563.6 | $ | 35,239.4 | $ | 36,809.5 | |||||||||||
Common
Equity Tier 1 Capital (to risk-weighted assets):
|
|||||||||||||||||||
Actual
|
13.9 | % | 12.9 | % | 13.1 | % | 12.8 | % | |||||||||||
Effective
minimum ratios under Basel III guidelines
(6)
|
5.125 | % | 4.5 | % | 5.125 | % | 4.5 | % | |||||||||||
Tier 1
Capital (to risk-weighted assets):
|
|||||||||||||||||||
Actual
|
13.9 | % | 12.9 | % | 13.1 | % | 12.8 | % | |||||||||||
Effective
minimum ratios under Basel III guidelines
(6)
|
6.625 | % | 6.0 | % | 6.625 | % | 6.0 | % | |||||||||||
Total
Capital (to risk-weighted assets):
|
|||||||||||||||||||
Actual
|
14.6 | % | 13.5 | % | 14.4 | % | 13.9 | % | |||||||||||
Effective
minimum ratios under Basel III guidelines
(6)
|
8.625 | % | 8.0 | % | 8.625 | % | 8.0 | % | |||||||||||
Tier 1
Leverage Ratio:
|
|||||||||||||||||||
Actual
|
14.4 | % | 13.5 | % | 10.9 | % | 10.9 | % | |||||||||||
Required
minimum ratio for capital adequacy purposes
|
4.0 | % | 4.0 | % | 4.0 | % | 4.0 | % |
(1)
|
See Consolidated Balance Sheets for the components of Total stockholders equity. |
(2)
|
Goodwill and disallowed intangible assets adjustments also reflect the portion included within assets held for sale. |
(3)
|
September 30th, 2016 amount represents the Volcker Rule requirement of deducting covered funds from equity. This requirement was first implemented in the second quarter of 2016. December 31, 2015 amount includes the Tier 1 capital charge for nonfinancial equity instruments under Basel I. |
(4)
|
Other reserves represents additional credit loss reserves for unfunded lending commitments, letters of credit, and deferred purchase agreements, all of which are recorded in Other Liabilities. |
(5)
|
Banking organizations are permitted to include in Tier 2 Capital up to 45% of net unrealized pretax gains on available-for-sale equity securities with readily determinable fair values. |
(6)
|
Required ratios under Basel III Final Rule in effect as of the reporting date. |
n
|
$16 million tax expense recorded this quarter related to the establishment of valuation allowances against certain international net deferred tax assets due to the exit of our international non-strategic portfolios, |
n
|
$14 million tax benefit, including interest and penalties, recorded in the first quarter resulting from favorable actions taken by the tax authorities related to uncertain tax positions taken on certain prior year non-U.S. tax returns, and |
n
|
Miscellaneous other $6 million of net tax expense items year to date. |
n
|
$647 million tax benefit recorded in the third quarter corresponding to a reduction to the U.S. federal deferred tax asset valuation allowance after considering the impact on earnings of the OneWest acquisition to support the Companys ability to utilize the U.S. federal net operating losses, |
n
|
$29 million tax expense including interest and penalties recorded in the third quarter related to an uncertain tax position taken on certain prior year international tax returns, |
n
|
$28 million tax expense recorded in the third quarter related to establishment of domestic and international deferred tax liabilities as a result of Managements decision to no longer assert its intent to indefinitely reinvest its unremitted earnings in China, and |
n
|
$9 million tax benefit recorded in the prior quarter corresponding to a reduction of certain tax reserves upon the receipt of a favorable tax ruling on an uncertain tax position taken on prior years tax returns. |
Commitments
(dollars in millions)
September 30, 2016
|
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Due to Expire
|
December 31,
2015 |
||||||||||||||||||
Within
One Year |
After
One Year |
Total
Outstanding |
Total
Outstanding |
||||||||||||||||
Financing Commitments
|
|||||||||||||||||||
Financing
assets
|
$ | 1,417.1 | $ | 5,326.1 | $ | 6,743.2 | $ | 7,385.6 | |||||||||||
Letters of
credit
|
|||||||||||||||||||
Standby letters
of credit
|
31.9 | 197.9 | 229.8 | 315.3 | |||||||||||||||
Other letters of
credit
|
11.5 | | 11.5 | 18.3 | |||||||||||||||
Guarantees
|
|||||||||||||||||||
Deferred
purchase agreements
|
2,076.5 | | 2,076.5 | 1,806.5 | |||||||||||||||
Guarantees,
acceptances and other recourse obligations
|
2.4 | | 2.4 | 0.7 | |||||||||||||||
Purchase and
Funding Commitments
|
|||||||||||||||||||
Aerospace
purchase commitments
|
591.2 | 8,346.1 | 8,937.3 | 9,618.1 | |||||||||||||||
Rail and other
purchase commitments
|
395.9 | 27.8 | 423.7 | 898.2 |
n
|
Commercial Banking (formerly North America Banking, or NAB) no longer includes the Consumer Banking division or the Canadian lending and equipment finance business. Commercial Banking is comprised of three divisions, Commercial Finance, Real Estate Finance, and Business Capital. Business Capital includes the former Equipment Finance and Commercial Services divisions. |
n
|
Transportation Finance (formerly Transportation & International Finance or TIF) no longer includes the China and the U.K. businesses. Transportation Finance is comprised of three divisions, Aerospace, Rail, and Maritime Finance. |
n
|
Consumer and Community Banking is a new segment that includes Legacy Consumer Mortgages (the former LCM segment) and other banking divisions that were included in the former NAB segment (Consumer Banking, Mortgage Lending, Wealth Management and SBA Lending). |
n
|
NSP includes businesses that we no longer consider strategic, including those in Canada, China and the recently exited U.K., that had been included in the former NAB and TIF segments. Historical data will also include other businesses and portfolios that have been sold, such as Mexico and Brazil. |
Transportation
Finance |
Commercial
Banking |
Consumer and
Community Banking |
Non-Strategic
Portfolios |
Corporate &
Other |
Total
CIT |
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Quarter Ended September 30, 2016
|
|||||||||||||||||||||||||||
Interest
income
|
$ | 51.3 | $ | 285.0 | $ | 102.9 | $ | 22.6 | $ | 28.3 | $ | 490.1 | |||||||||||||||
Interest
expense
|
(146.7 | ) | (76.2 | ) | (1.9 | ) | (12.7 | ) | (41.9 | ) | (279.4 | ) | |||||||||||||||
Provision for
credit losses
|
(5.5 | ) | (39.2 | ) | (1.6 | ) | 0.1 | | (46.2 | ) | |||||||||||||||||
Rental income
on operating leases
|
527.9 | 31.9 | | 3.8 | | 563.6 | |||||||||||||||||||||
Other
income
|
6.5 | 65.9 | 7.1 | 4.9 | (10.5 | ) | 73.9 | ||||||||||||||||||||
Depreciation
on operating lease equipment
|
(154.7 | ) | (24.4 | ) | | | | (179.1 | ) | ||||||||||||||||||
Maintenance
and other operating lease expenses
|
(60.4 | ) | | | | | (60.4 | ) | |||||||||||||||||||
Operating
expenses / loss on debt extinguishment and deposit redemption
|
(61.8 | ) | (161.2 | ) | (87.7 | ) | (11.0 | ) | (15.4 | ) | (337.1 | ) | |||||||||||||||
Income (loss)
from continuing operations before (provision) benefit for income taxes
|
$ | 156.6 | $ | 81.8 | $ | 18.8 | $ | 7.7 | $ | (39.5 | ) | $ | 225.4 | ||||||||||||||
Quarter
Ended September 30, 2015
|
|||||||||||||||||||||||||||
Interest
income
|
$ | 50.2 | $ | 251.5 | $ | 73.9 | $ | 43.7 | $ | 18.4 | $ | 437.7 | |||||||||||||||
Interest
expense
|
(139.7 | ) | (67.3 | ) | (13.8 | ) | (27.3 | ) | (32.2 | ) | (280.3 | ) | |||||||||||||||
Provision for
credit losses
|
1.6 | (43.2 | ) | (5.1 | ) | (3.2 | ) | | (49.9 | ) | |||||||||||||||||
Rental income
on operating leases
|
505.7 | 24.6 | | 9.0 | | 539.3 | |||||||||||||||||||||
Other
income
|
23.0 | 70.7 | 0.1 | (35.4 | ) | (19.2 | ) | 39.2 | |||||||||||||||||||
Depreciation
on operating lease equipment
|
(137.5 | ) | (18.1 | ) | | (3.5 | ) | | (159.1 | ) | |||||||||||||||||
Maintenance
and other operating lease expenses
|
(55.9 | ) | | | | | (55.9 | ) | |||||||||||||||||||
Operating
expenses / loss on debt extinguishment
|
(53.6 | ) | (146.5 | ) | (59.0 | ) | (26.0 | ) | (49.1 | ) | (334.2 | ) | |||||||||||||||
Income (loss)
from continuing operations before (provision) benefit for income taxes
|
$ | 193.8 | $ | 71.7 | $ | (3.9 | ) | $ | (42.7 | ) | $ | (82.1 | ) | $ | 136.8 |
Transportation
Finance |
Commercial
Banking |
Consumer and
Community Banking |
Non-Strategic
Portfolios |
Corporate &
Other |
Total
CIT |
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nine Months Ended September 30, 2016
|
|||||||||||||||||||||||||||
Interest
income
|
$ | 153.9 | $ | 861.3 | $ | 311.5 | $ | 70.8 | $ | 83.3 | $ | 1,480.8 | |||||||||||||||
Interest
expense
|
(441.3 | ) | (224.5 | ) | (16.7 | ) | (40.9 | ) | (124.9 | ) | (848.3 | ) | |||||||||||||||
Provision for
credit losses
|
(43.8 | ) | (124.1 | ) | (5.8 | ) | 0.1 | | (173.6 | ) | |||||||||||||||||
Rental income on
operating leases
|
1,609.0 | 87.7 | | 11.6 | | 1,708.3 | |||||||||||||||||||||
Other
income
|
37.0 | 182.3 | 26.9 | 26.1 | 6.8 | 279.1 | |||||||||||||||||||||
Depreciation on
operating lease equipment
|
(464.9 | ) | (65.9 | ) | | | | (530.8 | ) | ||||||||||||||||||
Maintenance and
other operating lease costs
|
(181.5 | ) | | | | | (181.5 | ) | |||||||||||||||||||
Operating
expenses / loss on debt extinguishment
|
(184.7 | ) | (468.3 | ) | (263.2 | ) | (35.2 | ) | (77.4 | ) | (1,028.8 | ) | |||||||||||||||
Income (loss)
from continuing operations before (provisions) benefit for income taxes
|
$ | 483.7 | $ | 248.5 | $ | 52.7 | $ | 32.5 | $ | (112.2 | ) | $ | 705.2 | ||||||||||||||
Select Period
End Balances
|
|||||||||||||||||||||||||||
Loans
|
$ | 2,224.2 | $ | 20,564.7 | $ | 7,129.3 | $ | | $ | | $ | 29,918.2 | |||||||||||||||
Credit balances
of factoring clients
|
| 1,228.9 | | | | 1,228.9 | |||||||||||||||||||||
Assets held for
sale
|
1,084.6 | 331.7 | 41.7 | 1,004.1 | | 2,462.1 | |||||||||||||||||||||
Operating lease
equipment, net
|
16,606.2 | 348.6 | | | | 16,954.8 | |||||||||||||||||||||
Nine Months
Ended September 30, 2015
|
|||||||||||||||||||||||||||
Interest
income
|
$ | 137.3 | $ | 618.7 | $ | 73.9 | $ | 145.3 | $ | 27.3 | $ | 1,002.5 | |||||||||||||||
Interest
expense
|
(439.0 | ) | (196.8 | ) | (13.8 | ) | (99.3 | ) | (67.9 | ) | (816.8 | ) | |||||||||||||||
Provision for
credit losses
|
(5.9 | ) | (85.6 | ) | (5.1 | ) | (6.3 | ) | | (102.9 | ) | ||||||||||||||||
Rental income on
operating leases
|
1,500.3 | 71.5 | | 29.8 | | 1,601.6 | |||||||||||||||||||||
Other
income
|
72.2 | 201.6 | 0.1 | (42.6 | ) | (42.2 | ) | 189.1 | |||||||||||||||||||
Depreciation on
operating lease equipment
|
(410.1 | ) | (52.8 | ) | | (10.8 | ) | | (473.7 | ) | |||||||||||||||||
Maintenance and
other operating lease costs
|
(151.4 | ) | | | | | (151.4 | ) | |||||||||||||||||||
Operating
expenses / loss on debt extinguishment
|
(184.6 | ) | (410.5 | ) | (59.0 | ) | (97.6 | ) | (59.2 | ) | (810.9 | ) | |||||||||||||||
Income (loss)
from continuing operations before (provisions) benefit for income taxes
|
$ | 518.8 | $ | 146.1 | $ | (3.9 | ) | $ | (81.5 | ) | $ | (142.0 | ) | $ | 437.5 | ||||||||||||
Select Period
End Balances
|
|||||||||||||||||||||||||||
Loans
|
$ | 3,305.5 | $ | 21,849.5 | $ | 7,251.2 | $ | | $ | | $ | 32,406.2 | |||||||||||||||
Credit balances
of factoring clients
|
| 1,609.3 | | | | 1,609.3 | |||||||||||||||||||||
Assets held for
sale
|
142.3 | 174.4 | 45.8 | 1,791.8 | | 2,154.3 | |||||||||||||||||||||
Operating lease
equipment, net
|
15,287.3 | 250.9 | | | | 15,538.2 |
Transportation
Finance |
Commercial
Banking |
Consumer and
Community Banking |
Total
|
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31,
2015
(1)
|
$ | 245.0 | $ | 579.1 | $ | 374.2 | $ | 1,198.3 | ||||||||||
Additions, Other
activity
(2)
|
(7.3 | ) | (8.9 | ) | (11.6 | ) | (27.8 | ) | ||||||||||
September 30,
2016
|
$ | 237.7 | $ | 570.2 | $ | 362.6 | $ | 1,170.5 |
(1)
|
In preparing the interim financial statements for the quarter ended June 30, 2016, the Company discovered and corrected an immaterial error impacting the December 31, 2015 goodwill allocation among Consumer and Community Banking and Commercial Banking in the amount of $23.2 million. The reclassification had no impact on the Companys Balance Sheet and Statements of Income or Cash Flows for any period. |
(2)
|
Includes purchase accounting measurement period adjustments in Commercial Banking and Consumer and Community Banking as well as the transfer of assets to held for sale and foreign exchange translation adjustments in Transportation Finance. |
Managements Discussion and Analysis of Financial Condition and Results of Operations | ||
Quantitative and Qualitative Disclosures about Market Risk |
1.
|
Focusing on Core Businesses: Invest in growth and strengthen its capabilities with respect to its primary lending, leasing and depository solutions for small business and middle market customers while we: |
n
|
Complete the separation of the Commercial Air business by the end of 2016; |
n
|
Complete the sales of the Canada Equipment Finance and Corporate Finance business and China Equipment Finance business; and |
n
|
Complete the integration of OneWest Bank by year end. |
2.
|
Improve Profitability and Return Capital: Achieve a return on tangible common equity (ROTCE) of 10 percent by 2018 by executing on initiatives to: |
n
|
Reduce operating expenses by $125 million by 2018; |
n
|
Optimize the size of the BHC and improve funding costs by growing its deposit base and transitioning the deposit mix to lower cost deposits; |
n
|
Increase net revenue by building out the investment portfolio; |
n
|
Return excess capital to shareholders, subject to regulatory approvals. |
3.
|
Maintain Strong Risk Management: The improvement in CITs credit ratings reflects the strength of its franchises, robust liquidity and capital positions and the expansion and diversification of deposit funding. Additionally, CIT will: |
n
|
Maintain strong underwriting standards with focus on appropriate risk adjusted returns throughout cycles and leverage expertise as an asset-backed lender; |
n
|
Enhance our capital planning process; and |
n
|
Maintain its culture of compliance and integrity. |
n
|
We closed the sale of the U.K. Equipment Finance business in the first quarter and closed the sale of the Canada Equipment Finance and Corporate Finance business in October; |
n
|
Signed a definitive agreement in October to sell our Commercial Air business for $10.0 billion, which represents a 6.7% premium to net assets; |
n
|
Received a non-objection from the Federal Reserve Bank of New York to return up to $3.3 billion of capital to shareholders that would occur in conjunction with the Commercial Air separation (1) |
n
|
We maintained our quarterly dividend at $0.15 per share; |
n
|
We continued to evaluate our businesses for alignment with our strategy to become a leading national middle market bank and transferred all of the business air portfolio to assets held for sale; |
n
|
We continued to review expenses and operating efficiencies, which resulted in additional organizational streamlining and we expect to be about a third of the way through our $125 million expense savings target by year end; |
n
|
We closed two offices and continued to combine systems to effect cost savings related to the OneWest Bank acquisition; |
n
|
Our adjusted return on tangible common equity (ROTCE) for the nine months ended September 30, 2016 was 7.58% (2) ; and |
n
|
We maintained our strong regulatory capital ratios. |
n
|
Commercial Banking (formerly North America Banking or NAB) no longer includes the Consumer Banking division or the Canadian lending and equipment finance business. Commercial Banking is comprised of three divisions, Commercial Finance, Real Estate Finance, and Business Capital. Business Capital includes the former Equipment Finance and Commercial Services divisions. |
n
|
Transportation Finance (formerly Transportation & International Finance or TIF) no longer includes the China and the U.K. businesses. Transportation Finance is comprised of three divisions, Aerospace (composed of Commercial Air and Business Air), Rail, and Maritime Finance. |
n
|
Consumer and Community Banking is a new segment that includes Legacy Consumer Mortgages (the former LCM segment) and other banking divisions that were included in the former NAB segment (Consumer Banking, Mortgage Lending, Wealth Management and SBA Lending). |
n
|
NSP includes businesses that we no longer consider strategic, including those in Canada and China and the recently exited U.K., that had been included in the former NAB and TIF segments. Historical data also include other businesses and portfolios that have been sold, such as Mexico and Brazil. |
(1)
|
Amended capital plan approval authorizes CIT to return $2.975 billion of common equity from the net proceeds of the Commercial Air sale; additional $0.325 billion contingent upon the issuance of a similar amount of Tier 1 qualifying preferred stock. |
(2)
|
ROTCE is a non-GAAP measure. See Non-GAAP Financial Measurements for reconciliation of non-GAAP to GAAP financial information. |
(3)
|
Net finance revenue and average earning assets are non-GAAP measures; see Non-GAAP Financial Measurements for a reconciliation of non-GAAP to GAAP financial information. |
|
Financing and leasing assets (FLA), which includes loans, operating lease equipment and assets held for sale (AHFS), were $49.3 billion, down slightly from $49.7 billion at June 30, 2016, reflecting prepayments and asset sales, primarily in the Commercial Finance division of Commercial Banking and $50.4 billion at December 31, 2015, also reflecting sales and run-off of the Non-Strategic Portfolio assets. |
|
Cash (cash and due from banks and interest bearing deposits) totaled $7.4 billion, down from $8.1 billion at June 30, 2016 and $8.3 billion at December 31, 2015. |
|
Investment securities totaled $3.6 billion, up from about $3.2 billion at June 30, 2016 and $3.0 billion at December 31, 2015, as we redeployed cash at CIT Bank, N.A. into higher-yielding High Quality Liquid Assets. |
(4)
|
Operating expenses excluding restructuring costs and intangible asset amortization and Net efficiency ratio is a non-GAAP measure. See Non-GAAP Measurements for reconciliation of non-GAAP financial information. |
(5)
|
Net efficiency ratio is a non-GAAP measure. See Non-GAAP Measurements for reconciliation of non-GAAP financial information. |
(6)
|
Total assets from continuing operations is a non-GAAP measure. See Non-GAAP Measurements for reconciliation of non-GAAP financial information |
1.
|
Assets of discontinued operations as of September 30, 2016 of $12.6 billion, which consists primarily of operating lease equipment of $9.6 billion, assets held for sale of $1.1 billion and other assets of $1.8 billion. |
2.
|
Net finance revenue for the quarter and nine months ended September 30, 2016 of approximately $120 million and $340 million, respectively. |
3.
|
Pretax income for the quarter and nine months ended September 30, 2016 of approximately $85 million and $260 million, respectively. |
Quarters Ended
|
Nine Months Ended
|
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
||||||||||||||||||
Interest
income
|
$ | 490.1 | $ | 495.3 | $ | 437.7 | $ | 1,480.8 | $ | 1,002.5 | ||||||||||||
Rental income
on operating leases
|
563.6 | 569.3 | 539.3 | 1,708.3 | 1,601.6 | |||||||||||||||||
Finance
revenue
|
1,053.7 | 1,064.6 | 977.0 | 3,189.1 | 2,604.1 | |||||||||||||||||
Interest
expense
|
(279.4 | ) | (282.5 | ) | (280.3 | ) | (848.3 | ) | (816.8 | ) | ||||||||||||
Depreciation on
operating lease equipment
|
(179.1 | ) | (176.4 | ) | (159.1 | ) | (530.8 | ) | (473.7 | ) | ||||||||||||
Maintenance and
other operating lease expenses
|
(60.4 | ) | (64.9 | ) | (55.9 | ) | (181.5 | ) | (151.4 | ) | ||||||||||||
Net finance
revenue
|
$ | 534.8 | $ | 540.8 | $ | 481.7 | $ | 1,628.5 | $ | 1,162.2 | ||||||||||||
Average Earning
Assets (AEA)
|
$ | 59,005.4 | $ | 59,229.2 | $ | 52,448.1 | $ | 59,118.2 | $ | 45,142.9 | ||||||||||||
Net finance
margin
|
3.63 | % | 3.65 | % | 3.67 | % | 3.67 | % | 3.43 | % |
(1)
|
NFR and AEA are non-GAAP measures; see Non-GAAP Financial Measurements sections for a reconciliation of non-GAAP to GAAP financial information. |
September 30, 2016
|
June 30, 2016
|
September 30, 2015
|
||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Average
Balance |
Revenue /
Expense |
Average
Rate (%) |
Average
Balance |
Revenue /
Expense |
Average
Rate (%) |
Average
Balance |
Revenue /
Expense |
Average
Rate (%) |
||||||||||||||||||||||||||||||
Interest
bearing cash
|
$ | 6,916.0 | $ | 9.5 | 0.55 | % | $ | 7,113.5 | $ | 8.9 | 0.50 | % | $ | 5,812.4 | $ | 4.5 | 0.31 | % | ||||||||||||||||||||
Securities
purchased under agreements to resell
|
| | | | | | 387.5 | 0.6 | 0.62 | % | ||||||||||||||||||||||||||||
Investment
securities
|
3,411.1 | 23.0 | 2.70 | % | 3,130.6 | 22.8 | 2.91 | % | 2,663.2 | 18.4 | 2.76 | % | ||||||||||||||||||||||||||
Loans
(including held for sale and credit balances of factoring clients)
(2),(3)
|
31,275.4 | 461.8 | 5.91 | % | 31,679.8 | 472.2 | 5.96 | % | 27,834.3 | 413.9 | 5.95 | % | ||||||||||||||||||||||||||
Operating lease
equipment, net (including held for sale)
(4)
|
17,036.6 | 324.1 | 7.61 | % | 16,925.5 | 328.0 | 7.75 | % | 15,445.1 | 324.3 | 8.40 | % | ||||||||||||||||||||||||||
Indemnification
assets
|
366.3 | (4.2 | ) | (4.59 | )% | 379.8 | (8.6 | ) | (9.06 | )% | 305.6 | 0.3 | 0.39 | % | ||||||||||||||||||||||||
Average earning
assets
(2)
|
$ | 59,005.4 | 814.2 | 5.52 | % | $ | 59,229.2 | 823.3 | 5.56 | % | $ | 52,448.1 | 762.0 | 5.81 | % | |||||||||||||||||||||||
Interest-bearing deposits
|
$ | 31,732.9 | $ | 99.4 | 1.25 | % | $ | 31,643.5 | $ | 99.4 | 1.26 | % | $ | 26,220.3 | $ | 89.7 | 1.37 | % | ||||||||||||||||||||
Borrowings
|
17,117.2 | 180.0 | 4.21 | % | 17,853.7 | 183.1 | 4.10 | % | 18,148.4 | 190.6 | 4.20 | % | ||||||||||||||||||||||||||
Total
interest-bearing liabilities
|
$ | 48,850.1 | 279.4 | 2.29 | % | $ | 49,497.2 | 282.5 | 2.28 | % | $ | 44,368.7 | 280.3 | 2.53 | % | |||||||||||||||||||||||
NFR and
NFM
|
$ | 534.8 | 3.63 | % | $ | 540.8 | 3.65 | % | $ | 481.7 | 3.67 | % |
September 2016 Over
June 2016 Comparison |
September 2016 Over
September 2015 Comparison |
|||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Increase (Decrease)
Due To Change In: |
Increase (Decrease)
Due To Change In: |
|||||||||||||||||||||||||
Volume
|
Rate
|
Net
|
Volume
|
Rate
|
Net
|
|||||||||||||||||||||
Interest
bearing cash
|
$ | (0.3 | ) | $ | 0.9 | $ | 0.6 | $ | 1.5 | $ | 3.5 | $ | 5.0 | |||||||||||||
Securities
purchased under agreements to resell
|
| | | | (0.6 | ) | (0.6 | ) | ||||||||||||||||||
Investments
|
1.9 | (1.7 | ) | 0.2 | 5.1 | (0.5 | ) | 4.6 | ||||||||||||||||||
Loans
(including held for sale and net of credit balances of factoring clients)
(2),(3)
|
(6.0 | ) | (4.4 | ) | (10.4 | ) | 50.9 | (3.0 | ) | 47.9 | ||||||||||||||||
Operating lease
equipment, net (including held for sale)
(4)
|
2.1 | (6.0 | ) | (3.9 | ) | 30.3 | (30.5 | ) | (0.2 | ) | ||||||||||||||||
Indemnification
assets
|
0.2 | 4.2 | 4.4 | (0.7 | ) | (3.8 | ) | (4.5 | ) | |||||||||||||||||
Total earning
assets
|
$ | (2.1 | ) | $ | (7.0 | ) | $ | (9.1 | ) | $ | 87.1 | $ | (34.9 | ) | $ | 52.2 | ||||||||||
Interest-bearing deposits
|
$ | 0.3 | $ | (0.3 | ) | $ | | $ | 17.2 | $ | (7.5 | ) | $ | 9.7 | ||||||||||||
Borrowings
|
(7.8 | ) | 4.7 | (3.1 | ) | (10.9 | ) | 0.3 | (10.6 | ) | ||||||||||||||||
Total
interest-bearing liabilities
|
$ | (7.5 | ) | $ | 4.4 | $ | (3.1 | ) | $ | 6.3 | $ | (7.2 | ) | $ | (0.9 | ) |
(1)
|
Average rates are impacted by purchase accounting accretion and amortization. |
(2)
|
The balance and rate presented is calculated net of average credit balances for factoring clients. |
(3)
|
Non-accrual loans and related income are included in the respective categories. |
(4)
|
Operating lease rental income is a significant source of revenue; therefore, we have presented the rental revenues net of depreciation and net of maintenance and other operating lease expenses. |
September 30,
2016 |
December 31,
2015 |
September 30,
2015 |
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Deposits
|
66 | % | 64 | % | 63 | % | |||||||||
Unsecured
|
22 | % | 21 | % | 21 | % | |||||||||
Secured Borrowings:
|
|||||||||||||||
Structured
financings
|
7 | % | 9 | % | 10 | % | |||||||||
FHLB
Advances
|
5 | % | 6 | % | 6 | % |
Quarter Ended
September 30, 2016 |
Quarter Ended June 30, 2016
|
Quarter Ended
September 30, 2015 |
|||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Average
Balance |
Interest
Expense |
Rate %
|
Average
Balance |
Interest
Expense |
Rate %
|
Average
Balance |
Interest
Expense |
Rate %
|
|||||||||||||||||||||||||||||||
Interest-Bearing Deposits
|
|||||||||||||||||||||||||||||||||||||||
CDs
|
$ | 18,139.4 | $ | 72.6 | 1.60 | % | $ | 18,397.7 | $ | 74.7 | 1.63 | % | $ | 15,566.7 | $ | 67.6 | 1.74 | % | |||||||||||||||||||||
Interest-bearing checking
|
3,299.6 | 4.3 | 0.52 | % | 3,007.8 | 3.8 | 0.51 | % | 2,037.6 | 2.6 | 0.51 | % | |||||||||||||||||||||||||||
Savings
|
4,386.2 | 9.7 | 0.88 | % | 4,568.9 | 9.8 | 0.86 | % | 4,472.8 | 11.0 | 0.98 | % | |||||||||||||||||||||||||||
Money markets
/ sweeps
(1)
|
5,907.7 | 12.8 | 0.87 | % | 5,669.1 | 11.1 | 0.78 | % | 4,143.2 | 8.5 | 0.82 | % | |||||||||||||||||||||||||||
Total
interest-bearing deposits
(2)
|
31,732.9 | 99.4 | 1.25 | % | 31,643.5 | 99.4 | 1.26 | % | 26,220.3 | 89.7 | 1.37 | % | |||||||||||||||||||||||||||
Borrowings
|
|||||||||||||||||||||||||||||||||||||||
Unsecured
notes
|
10,593.2 | 137.7 | 5.20 | % | 10,589.3 | 137.6 | 5.20 | % | 10,684.3 | 138.7 | 5.19 | % | |||||||||||||||||||||||||||
Secured
borrowings
|
3,758.9 | 36.4 | 3.87 | % | 4,121.2 | 39.3 | 3.81 | % | 5,469.4 | 50.2 | 3.67 | % | |||||||||||||||||||||||||||
FHLB
advances
|
2,765.1 | 5.9 | 0.85 | % | 3,143.2 | 6.2 | 0.79 | % | 1,994.7 | 1.7 | 0.34 | % | |||||||||||||||||||||||||||
Total
borrowings
|
17,117.2 | 180.0 | 4.21 | % | 17,853.7 | 183.1 | 4.10 | % | 18,148.4 | 190.6 | 4.20 | % | |||||||||||||||||||||||||||
Total
interest-bearing liabilities
|
$ | 48,850.1 | $ | 279.4 | 2.29 | % | $ | 49,497.2 | $ | 282.5 | 2.28 | % | $ | 44,368.7 | $ | 280.3 | 2.53 | % |
September 30, 2016
|
June 30, 2016
|
September 30, 2015
|
||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Average
Balance |
Interest
Expense |
Average
Rate (%) |
Average
Balance |
Interest
Expense |
Average
Rate (%) |
Average
Balance |
Interest
Expense |
Average
Rate (%) |
||||||||||||||||||||||||||||||
Interest
bearing deposits
|
$ | 31,732.9 | $ | 99.4 | 1.25 | % | $ | 31,643.5 | $ | 99.4 | 1.26 | % | $ | 26,220.3 | $ | 89.7 | 1.37 | % | ||||||||||||||||||||
Non-interest
bearing deposits
|
1,197.4 | | | 1,124.9 | | | 739.8 | | | |||||||||||||||||||||||||||||
Total
deposits
|
$ | 32,930.3 | $ | 99.4 | 1.21 | % | $ | 32,768.4 | $ | 99.4 | 1.21 | % | $ | 26,960.1 | $ | 89.7 | 1.33 | % |
(1)
|
Includes deposit sweep arrangements related to money market and healthcare savings accounts. |
(2)
|
Average balance excludes non-interest-bearing deposits such as escrow accounts, security deposits, and other similar accounts, therefore totals may differ from other average balances included in this document. |
Segment
Average Yield and Other Data
(dollars in millions)
Quarters Ended
|
Nine Months Ended
|
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
|||||||||||||||||||
Commercial Banking
|
|||||||||||||||||||||||
AEA
|
$ | 20,385.1 | $ | 20,575.1 | $ | 18,724.0 | $ | 20,526.5 | $ | 15,846.5 | |||||||||||||
NFR
|
216.3 | 221.7 | 190.7 | 658.6 | 440.6 | ||||||||||||||||||
Gross
yield
|
6.22 | % | 6.18 | % | 5.90 | % | 6.16 | % | 5.81 | % | |||||||||||||
NFM
|
4.24 | % | 4.31 | % | 4.07 | % | 4.28 | % | 3.71 | % | |||||||||||||
AEA
|
|||||||||||||||||||||||
Commercial
Finance
|
$ | 8,861.0 | $ | 9,260.5 | $ | 8,906.7 | $ | 9,212.2 | $ | 7,480.2 | |||||||||||||
Real Estate
Finance
|
5,503.2 | 5,453.8 | 3,991.0 | 5,423.7 | 2,551.8 | ||||||||||||||||||
Business
Capital
|
6,020.9 | 5,860.8 | 5,826.3 | 5,890.6 | 5,814.5 | ||||||||||||||||||
Gross
yield
|
|||||||||||||||||||||||
Commercial
Finance
|
5.31 | % | 5.38 | % | 4.87 | % | 5.24 | % | 4.58 | % | |||||||||||||
Real Estate
Finance
|
5.13 | % | 5.18 | % | 5.08 | % | 5.26 | % | 4.54 | % | |||||||||||||
Business
Capital
|
8.54 | % | 8.38 | % | 8.03 | % | 8.44 | % | 7.94 | % |
Quarters Ended
|
Nine Months Ended
|
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
|||||||||||||||||||
Commercial Banking (continued)
|
|||||||||||||||||||||||
NFR
|
|||||||||||||||||||||||
Commercial
Finance
|
$ | 88.5 | $ | 94.5 | $ | 79.9 | $ | 273.6 | $ | 169.0 | |||||||||||||
Real Estate
Finance
|
51.5 | 51.6 | 37.1 | 157.5 | 58.2 | ||||||||||||||||||
Business
Capital
|
76.3 | 75.6 | 73.7 | 227.5 | 213.4 | ||||||||||||||||||
NFM
|
|||||||||||||||||||||||
Commercial
Finance
|
4.00 | % | 4.08 | % | 3.59 | % | 3.96 | % | 3.01 | % | |||||||||||||
Real Estate
Finance
|
3.74 | % | 3.78 | % | 3.72 | % | 3.87 | % | 3.04 | % | |||||||||||||
Business
Capital
|
5.07 | % | 5.16 | % | 5.06 | % | 5.15 | % | 4.89 | % | |||||||||||||
Transportation Finance
|
|||||||||||||||||||||||
AEA
|
$ | 20,953.0 | $ | 20,945.7 | $ | 19,009.2 | $ | 20,818.5 | $ | 18,972.2 | |||||||||||||
NFR
|
217.4 | 220.2 | 222.8 | 675.2 | 637.1 | ||||||||||||||||||
Gross
yield
|
11.06 | % | 11.20 | % | 11.70 | % | 11.29 | % | 11.51 | % | |||||||||||||
NFM
|
4.15 | % | 4.21 | % | 4.69 | % | 4.32 | % | 4.48 | % | |||||||||||||
AEA
|
|||||||||||||||||||||||
Aerospace
|
$ | 12,180.5 | $ | 12,255.8 | $ | 11,251.2 | $ | 12,143.7 | $ | 11,614.2 | |||||||||||||
Rail
|
7,164.1 | 7,036.7 | 6,314.7 | 7,025.5 | 6,123.3 | ||||||||||||||||||
Maritime
Finance
|
1,608.4 | 1,653.2 | 1,443.3 | 1,649.3 | 1,234.7 | ||||||||||||||||||
Gross
yield
|
|||||||||||||||||||||||
Aerospace
|
11.04 | % | 10.87 | % | 10.98 | % | 11.04 | % | 10.58 | % | |||||||||||||
Rail
|
12.38 | % | 13.16 | % | 14.50 | % | 13.08 | % | 14.58 | % | |||||||||||||
Maritime
Finance
|
5.30 | % | 5.30 | % | 5.04 | % | 5.45 | % | 5.04 | % | |||||||||||||
NFR
|
|||||||||||||||||||||||
Aerospace
|
$ | 124.8 | $ | 110.6 | $ | 111.2 | $ | 355.0 | $ | 311.9 | |||||||||||||
Rail
|
77.5 | 94.0 | 98.7 | 271.7 | 293.0 | ||||||||||||||||||
Maritime
Finance
|
15.1 | 15.6 | 12.9 | 48.5 | 32.2 | ||||||||||||||||||
NFM
|
|||||||||||||||||||||||
Aerospace
|
4.10 | % | 3.61 | % | 3.95 | % | 3.90 | % | 3.58 | % | |||||||||||||
Rail
|
4.33 | % | 5.34 | % | 6.25 | % | 5.16 | % | 6.38 | % | |||||||||||||
Maritime
Finance
|
3.76 | % | 3.77 | % | 3.58 | % | 3.92 | % | 3.48 | % | |||||||||||||
Consumer
and Community Banking
|
|||||||||||||||||||||||
AEA
|
$ | 7,658.1 | $ | 7,728.6 | $ | 5,127.5 | $ | 7,711.9 | $ | 1,728.5 | |||||||||||||
NFR
|
101.0 | 99.5 | 60.1 | 294.8 | 60.1 | ||||||||||||||||||
Gross
yield
|
5.37 | % | 5.46 | % | 5.76 | % | 5.39 | % | 5.70 | % | |||||||||||||
NFM
|
5.28 | % | 5.15 | % | 4.69 | % | 5.10 | % | 4.64 | % | |||||||||||||
AEA
|
|||||||||||||||||||||||
Other
Consumer Banking
|
$ | 2,175.1 | $ | 2,071.7 | $ | 1,170.0 | $ | 2,060.5 | $ | 394.8 | |||||||||||||
Legacy
Consumer Mortgages
|
5,483.0 | 5,656.9 | 3,957.5 | 5,651.4 | 1,333.7 | ||||||||||||||||||
Gross
yield
|
|||||||||||||||||||||||
Other
Consumer Banking
|
3.52 | % | 3.58 | % | 3.48 | % | 3.59 | % | 3.44 | % | |||||||||||||
Legacy
Consumer Mortgages
|
6.11 | % | 6.15 | % | 6.44 | % | 6.04 | % | 6.37 | % | |||||||||||||
NFR
|
|||||||||||||||||||||||
Other
Consumer Banking
|
$ | 40.5 | $ | 37.1 | $ | 13.3 | $ | 111.6 | $ | 13.3 | |||||||||||||
Legacy
Consumer Mortgages
|
60.5 | 62.4 | 46.8 | 183.2 | 46.8 |
Quarters Ended
|
Nine Months Ended
|
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
||||||||||||||||||
Consumer
and Community Banking (continued)
|
||||||||||||||||||||||
NFM
|
||||||||||||||||||||||
Other
Consumer Banking
|
7.45 | % | 7.16 | % | 4.56 | % | 7.22 | % | 4.49 | % | ||||||||||||
Legacy
Consumer Mortgages
|
4.41 | % | 4.41 | % | 4.73 | % | 4.32 | % | 4.68 | % | ||||||||||||
Non-Strategic Portfolios
|
||||||||||||||||||||||
AEA
|
$ | 1,283.8 | $ | 1,384.5 | $ | 2,284.3 | $ | 1,398.7 | $ | 2,514.6 | ||||||||||||
NFR
|
13.7 | 13.5 | 21.9 | 41.5 | 65.0 | |||||||||||||||||
Gross
yield
|
8.23 | % | 7.86 | % | 9.23 | % | 7.85 | % | 9.28 | % | ||||||||||||
NFM
|
4.27 | % | 3.90 | % | 3.83 | % | 3.96 | % | 3.45 | % |
Quarters Ended
|
|||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016
|
June 30, 2016
|
September 30, 2015
|
|||||||||||||||||||||||||||||||||||||
PAA Accretion Recognized in:
|
PAA Accretion Recognized in:
|
PAA Accretion Recognized in:
|
|||||||||||||||||||||||||||||||||||||
Interest
Income (1) |
Interest
Expense (2) |
NFR
|
Interest
Income (1) |
Interest
Expense (2) |
NFR
|
Interest
Income (1) |
Interest
Expense (2) |
NFR
|
|||||||||||||||||||||||||||||||
Commercial Banking
|
|||||||||||||||||||||||||||||||||||||||
Commercial
Finance
|
$ | 20.4 | $ | 0.4 | $ | 20.8 | $ | 18.5 | $ | 0.6 | $ | 19.1 | $ | 13.6 | $ | 0.8 | $ | 14.4 | |||||||||||||||||||||
Real Estate
Finance
|
16.4 | | 16.4 | 18.9 | | 18.9 | 10.9 | | 10.9 | ||||||||||||||||||||||||||||||
Total
Commercial Banking
|
$ | 36.8 | $ | 0.4 | $ | 37.2 | $ | 37.4 | $ | 0.6 | $ | 38.0 | $ | 24.5 | $ | 0.8 | $ | 25.3 | |||||||||||||||||||||
Consumer and
Community Banking
|
|||||||||||||||||||||||||||||||||||||||
Other
Consumer Banking
|
$ | 0.3 | $ | 1.9 | $ | 2.2 | $ | 0.2 | $ | 2.4 | $ | 2.6 | $ | (0.8 | ) | $ | 2.6 | $ | 1.8 | ||||||||||||||||||||
Legacy
Consumer Mortgages
|
26.8 | | 26.8 | 32.2 | | 32.2 | 22.1 | | 22.1 | ||||||||||||||||||||||||||||||
Total Consumer
and Community Banking
|
$ | 27.1 | $ | 1.9 | $ | 29.0 | $ | 32.4 | $ | 2.4 | $ | 34.8 | $ | 21.3 | $ | 2.6 | $ | 23.9 | |||||||||||||||||||||
Corporate
and Other
|
$ | | $ | 1.0 | $ | 1.0 | $ | | $ | 1.3 | $ | 1.3 | $ | | $ | 1.5 | $ | 1.5 | |||||||||||||||||||||
Total
CIT
|
$ | 63.9 | $ | 3.3 | $ | 67.2 | $ | 69.8 | $ | 4.3 | $ | 74.1 | $ | 45.8 | $ | 4.9 | $ | 50.7 |
Nine Months Ended
|
||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016
|
September 30, 2015
|
|||||||||||||||||||||||||
PAA Accretion Recognized in:
|
PAA Accretion Recognized in:
|
|||||||||||||||||||||||||
Interest
Income (1) |
Interest
Expense (2) |
NFR
|
Interest
Income (1) |
Interest
Expense (2) |
NFR
|
|||||||||||||||||||||
Commercial
Banking
|
||||||||||||||||||||||||||
Commercial
Finance
|
$ | 57.8 | $ | 1.9 | $ | 59.7 | $ | 13.6 | $ | 0.8 | $ | 14.4 | ||||||||||||||
Real Estate
Finance
|
55.0 | | 55.0 | 10.9 | | 10.9 | ||||||||||||||||||||
Total
Commercial Banking
|
$ | 112.8 | $ | 1.9 | $ | 114.7 | $ | 24.5 | $ | 0.8 | $ | 25.3 | ||||||||||||||
Consumer
and Community Banking
|
||||||||||||||||||||||||||
Other Consumer
Banking
|
$ | 1.1 | $ | 7.5 | $ | 8.6 | $ | (0.8 | ) | $ | 2.6 | $ | 1.8 | |||||||||||||
Legacy
Consumer Mortgages
|
85.6 | | 85.6 | 22.1 | | 22.1 | ||||||||||||||||||||
Total Consumer
and Community Banking
|
$ | 86.7 | $ | 7.5 | $ | 94.2 | $ | 21.3 | $ | 2.6 | $ | 23.9 | ||||||||||||||
Corporate
and Other
|
$ | | $ | 3.7 | $ | 3.7 | $ | | $ | 2.0 | $ | 2.0 | ||||||||||||||
Total
CIT
|
$ | 199.5 | $ | 13.1 | $ | 212.6 | $ | 45.8 | $ | 5.4 | $ | 51.2 |
(1)
|
Loans acquired in the OneWest Bank acquisition were recorded at a net discount, therefore the purchase accounting accretion of that adjustment increases interest income. |
(2)
|
Debt and deposits acquired in the OneWest Bank acquisition were recorded at a net premium, therefore the purchase accounting accretion of that adjustment decreases interest expense. |
Quarters Ended
|
||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016
|
June 30, 2016
|
September 30, 2015
|
||||||||||||||||||||||||
Rental income
on operating leases
|
$ | 563.6 | 13.33 | % | $ | 569.3 | 13.57 | % | $ | 539.3 | 14.14 | % | ||||||||||||||
Depreciation on
operating lease equipment
|
(179.1 | ) | (4.23 | )% | (176.4 | ) | (4.20 | )% | (159.1 | ) | (4.17 | )% | ||||||||||||||
Maintenance and
other operating lease expenses
|
(60.4 | ) | (1.43 | )% | (64.9 | ) | (1.55 | )% | (55.9 | ) | (1.47 | )% | ||||||||||||||
Net operating
lease revenue and %
|
$ | 324.1 | 7.67 | % | $ | 328.0 | 7.82 | % | $ | 324.3 | 8.50 | % | ||||||||||||||
Average
Operating Lease Equipment (AOL)
|
$ | 16,909.4 | $ | 16,781.3 | $ | 15,251.8 |
Nine Months Ended
|
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016
|
September 30, 2015
|
|||||||||||||||||
Rental income
on operating leases
|
$ | 1,708.3 | 13.58 | % | $ | 1,601.6 | 14.19 | % | ||||||||||
Depreciation on
operating lease equipment
|
(530.8 | ) | (4.22 | )% | (473.7 | ) | (4.20 | )% | ||||||||||
Maintenance and
other operating lease expenses
|
(181.5 | ) | (1.44 | )% | (151.4 | ) | (1.34 | )% | ||||||||||
Net operating
lease revenue and %
|
$ | 996.0 | 7.92 | % | $ | 976.5 | 8.65 | % | ||||||||||
Average
Operating Lease Equipment (AOL)
|
$ | 16,777.0 | $ | 15,053.4 |
Allowance
for Loan Losses
(dollars in millions)
Quarters ended
|
Nine Months Ended
|
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
||||||||||||||||||
Allowance
beginning of period
|
$ | 399.4 | $ | 404.6 | $ | 350.9 | $ | 360.2 | $ | 346.4 | ||||||||||||
Provision for
credit losses
(1)
|
46.2 | 28.1 | 49.9 | 173.6 | 102.9 | |||||||||||||||||
Other
(1)
|
(0.5 | ) | 7.7 | (4.5 | ) | 3.6 | (8.6 | ) | ||||||||||||||
Net
additions
|
45.7 | 35.8 | 45.4 | 177.2 | 94.3 | |||||||||||||||||
Gross
charge-offs
(2)
|
(30.5 | ) | (45.1 | ) | (67.4 | ) | (131.7 | ) | (128.2 | ) | ||||||||||||
Recoveries
|
7.1 | 4.1 | 6.1 | 16.0 | 22.5 | |||||||||||||||||
Net
Charge-offs
|
(23.4 | ) | (41.0 | ) | (61.3 | ) | (115.7 | ) | (105.7 | ) | ||||||||||||
Allowance
end of period
|
$ | 421.7 | $ | 399.4 | $ | 335.0 | $ | 421.7 | $ | 335.0 | ||||||||||||
Provision for
credit losses
|
||||||||||||||||||||||
Specific
reserves on impaired loans
|
$ | 9.9 | $ | (0.5 | ) | $ | 9.5 | $ | 22.7 | $ | 17.6 | |||||||||||
Non-specific
reserves
|
36.3 | 28.6 | 40.4 | 150.9 | 85.3 | |||||||||||||||||
Total
|
$ | 46.2 | $ | 28.1 | $ | 49.9 | $ | 173.6 | $ | 102.9 | ||||||||||||
Allowance for
loan losses
|
||||||||||||||||||||||
Specific
reserves on impaired loans
|
$ | 33.8 | $ | 29.4 | $ | 18.3 | ||||||||||||||||
Non-specific
reserves
|
387.9 | 370.0 | 316.7 | |||||||||||||||||||
Total
|
$ | 421.7 | $ | 399.4 | $ | 335.0 | ||||||||||||||||
Ratio
|
||||||||||||||||||||||
Allowance for
loan losses as a percentage of total loans
|
1.41 | % | 1.31 | % | 1.03 | % | ||||||||||||||||
Allowance for
loan losses as a percent of finance receivable/Commercial
|
1.74 | % | 1.62 | % | 1.31 | % | ||||||||||||||||
Allowance for
loan losses plus principal loss discount as a percent of finance receivables (before the principal loss discount)/Commercial
|
1.93 | % | 1.83 | % | 1.78 | % | ||||||||||||||||
Allowance for
loan losses plus principal loss discount as a percent of finance receivables (before the principal loss discount)/Consumer
|
6.73 | % | 7.20 | % | 9.84 | % |
(1)
|
Includes amounts related to reserves on unfunded loan commitments and letters of credit, and for deferred purchase agreements, which are reflected in Other Liabilities, as well as foreign currency translation adjustments. |
(2)
|
Gross charge-offs included $8 million, $19 million and $40 million for the quarters ended September 30, 2016, December 31, 2015 and September 30, 2015, respectively, related to the transfer of receivables to AHFS. Gross charge-offs included $43 million and $54 million for the nine months ended September 30, 2016 and 2015, respectively, related to the transfer of receivables to AHFS. |
Loan
Net Carrying Value
(dollars in millions)
Finance
Receivables |
Allowance
for Loan Losses |
Net Carrying
Value |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September
30, 2016
|
||||||||||||||
Commercial
Banking
|
$ | 20,564.7 | $ | (342.5 | ) | $ | 20,222.2 | |||||||
Transportation
Finance
|
2,224.2 | (54.7 | ) | 2,169.5 | ||||||||||
Consumer and
Community Banking
|
7,129.3 | (24.5 | ) | 7,104.8 | ||||||||||
Total
|
$ | 29,918.2 | $ | (421.7 | ) | $ | 29,496.5 | |||||||
December 31,
2015
|
||||||||||||||
Commercial
Banking
|
$ | 20,929.2 | $ | (310.5 | ) | $ | 20,618.7 | |||||||
Transportation
Finance
|
3,542.1 | (39.4 | ) | 3,502.7 | ||||||||||
Consumer and
Community Banking
|
7,200.4 | (10.3 | ) | 7,190.1 | ||||||||||
Total
|
$ | 31,671.7 | $ | (360.2 | ) | $ | 31,311.5 |
Net
Charge-offs
(dollars in millions)
Quarters Ended
|
Nine Months Ended
|
||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
|||||||||||||||||||||||||||||||||||||||
Gross Charge-offs
|
|||||||||||||||||||||||||||||||||||||||||||
Aerospace
|
$ | 2.1 | 1.01 | % | $ | 6.6 | 2.66 | % | $ | | | $ | 28.0 | 3.23 | % | $ | 0.1 | 0.01 | % | ||||||||||||||||||||||||
Maritime
|
| | | | 0.1 | 0.03 | % | 0.3 | 0.03 | % | 0.7 | 0.07 | % | ||||||||||||||||||||||||||||||
Transportation Finance
(1)
|
2.1 | 0.33 | % | 6.6 | 0.97 | % | 0.1 | 0.01 | % | 28.3 | 1.30 | % | 0.8 | 0.03 | % | ||||||||||||||||||||||||||||
Commercial
Finance
|
9.2 | 0.44 | % | 18.8 | 0.84 | % | 5.7 | 0.26 | % | 44.1 | 0.66 | % | 33.7 | 0.61 | % | ||||||||||||||||||||||||||||
Real Estate
Finance
|
| | 0.1 | 0.01 | % | | | 1.6 | 0.04 | % | | | |||||||||||||||||||||||||||||||
Business
Capital
|
18.5 | 1.10 | % | 19.1 | 1.16 | % | 17.1 | 1.04 | % | 55.8 | 1.12 | % | 41.5 | 0.84 | % | ||||||||||||||||||||||||||||
Commercial
Banking
(2)
|
27.7 | 0.54 | % | 38.0 | 0.72 | % | 22.8 | 0.47 | % | 101.5 | 0.65 | % | 75.2 | 0.61 | % | ||||||||||||||||||||||||||||
Legacy Consumer
Mortgages
|
0.7 | 0.05 | % | 0.5 | 0.04 | % | 1.6 | 0.17 | % | 1.9 | 0.05 | % | 1.6 | 0.17 | % | ||||||||||||||||||||||||||||
Consumer and
Community Banking
|
0.7 | 0.04 | % | 0.5 | 0.03 | % | 1.6 | 0.14 | % | 1.9 | 0.04 | % | 1.6 | 0.13 | % | ||||||||||||||||||||||||||||
Non-Strategic Portfolios
|
| | | | 42.9 | 12.81 | % | | | 50.6 | 5.28 | % | |||||||||||||||||||||||||||||||
Total
|
$ | 30.5 | 0.40 | % | $ | 45.1 | 0.58 | % | $ | 67.4 | 0.94 | % | $ | 131.7 | 0.57 | % | $ | 128.2 | 0.76 | % | |||||||||||||||||||||||
Recoveries
|
|||||||||||||||||||||||||||||||||||||||||||
Aerospace
|
$ | | | $ | | | $ | | | $ | | | $ | 0.1 | 0.01 | % | |||||||||||||||||||||||||||
Transportation Finance
(1)
|
| | | | | | | | 0.1 | | |||||||||||||||||||||||||||||||||
Commercial
Finance
|
0.8 | 0.04 | % | 0.1 | 0.01 | % | 0.6 | 0.03 | % | 1.4 | 0.02 | % | 1.9 | 0.03 | % | ||||||||||||||||||||||||||||
Business
Capital
|
5.4 | 0.32 | % | 3.2 | 0.20 | % | 3.7 | 0.24 | % | 12.1 | 0.24 | % | 10.3 | 0.21 | % | ||||||||||||||||||||||||||||
Commercial
Banking
(2)
|
6.2 | 0.12 | % | 3.3 | 0.06 | % | 4.3 | 0.09 | % | 13.5 | 0.09 | % | 12.2 | 0.10 | % | ||||||||||||||||||||||||||||
Legacy Consumer
Mortgages
|
0.8 | 0.06 | % | 0.8 | 0.07 | % | 0.5 | 0.05 | % | 2.4 | 0.07 | % | 0.5 | 0.05 | % | ||||||||||||||||||||||||||||
Consumer and
Community Banking
|
0.8 | 0.05 | % | 0.8 | 0.05 | % | 0.5 | 0.05 | % | 2.4 | 0.05 | % | 0.5 | 0.04 | % | ||||||||||||||||||||||||||||
Non-Strategic Portfolios
|
0.1 | | | | 1.3 | 0.38 | % | 0.1 | | 9.7 | 1.01 | % | |||||||||||||||||||||||||||||||
Total
|
$ | 7.1 | 0.09 | % | $ | 4.1 | 0.05 | % | $ | 6.1 | 0.08 | % | $ | 16.0 | 0.07 | % | $ | 22.5 | 0.13 | % | |||||||||||||||||||||||
Net Charge-offs
|
|||||||||||||||||||||||||||||||||||||||||||
Aerospace
|
$ | 2.1 | 1.01 | % | $ | 6.6 | 2.66 | % | $ | | | $ | 28.0 | 3.23 | % | $ | | | |||||||||||||||||||||||||
Maritime
|
| | | | 0.1 | 0.03 | % | 0.3 | 0.03 | % | 0.7 | 0.07 | % | ||||||||||||||||||||||||||||||
Transportation Finance
(1)
|
2.1 | 0.33 | % | 6.6 | 0.97 | % | 0.1 | 0.01 | % | 28.3 | 1.30 | % | 0.7 | 0.03 | % | ||||||||||||||||||||||||||||
Commercial
Finance
|
8.4 | 0.40 | % | 18.7 | 0.83 | % | 5.1 | 0.23 | % | 42.7 | 0.64 | % | 31.8 | 0.58 | % | ||||||||||||||||||||||||||||
Real Estate
Finance
|
| | 0.1 | 0.01 | % | | | 1.6 | 0.04 | % | | | |||||||||||||||||||||||||||||||
Business
Capital
|
13.1 | 0.78 | % | 15.9 | 0.96 | % | 13.4 | 0.80 | % | 43.7 | 0.88 | % | 31.2 | 0.63 | % | ||||||||||||||||||||||||||||
Commercial
Banking
(2)
|
21.5 | 0.42 | % | 34.7 | 0.66 | % | 18.5 | 0.38 | % | 88.0 | 0.56 | % | 63.0 | 0.51 | % | ||||||||||||||||||||||||||||
Legacy Consumer
Mortgages
|
(0.1 | ) | (0.01 | )% | (0.3 | ) | (0.03 | )% | 1.1 | 0.12 | % | (0.5 | ) | (0.02 | )% | 1.1 | 0.12 | % | |||||||||||||||||||||||||
Consumer and
Community Banking
|
(0.1 | ) | (0.01 | )% | (0.3 | ) | (0.02 | )% | 1.1 | 0.09 | % | (0.5 | ) | (0.01 | )% | 1.1 | 0.09 | % | |||||||||||||||||||||||||
Non-Strategic Portfolios
|
(0.1 | ) | | | | 41.6 | 12.43 | % | (0.1 | ) | | 40.9 | 4.27 | % | |||||||||||||||||||||||||||||
Total
|
$ | 23.4 | 0.31 | % | $ | 41.0 | 0.53 | % | $ | 61.3 | 0.86 | % | $ | 115.7 | 0.50 | % | $ | 105.7 | 0.63 | % |
(1)
|
Transportation Finance charge-offs related to the transfer of receivables to assets held for sale for the quarters ended September 30, 2016 and June 30, 2016, totaled $2 million and $7 million, respectively. The year to date balances totaled $16 million and $1 million for the nine months ended September 30, 2016 and 2015, respectively. |
(2)
|
Commercial Banking charge-offs related to the transfer of receivables to assets held for sale for the quarters ended September 30, 2016, June 30, 2016, and September 30, 2015 totaled $6 million, $19 million, and $1 million, respectively. The year to date balances totaled $27 million and $13 million for the nine months ended September 30, 2016 and 2015, respectively. |
Non-accrual
Loans
(dollars in millions)
September 30,
2016 |
December 31,
2015 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Non-accrual
loans
|
||||||||||
U.S.
|
$ | 194.3 | $ | 185.3 | ||||||
Foreign
|
94.2 | 82.4 | ||||||||
Non-accrual
loans
|
$ | 288.5 | $ | 267.7 | ||||||
Troubled
Debt Restructurings
|
||||||||||
U.S.
|
$ | 57.6 | $ | 25.2 | ||||||
Foreign
|
4.6 | 15.0 | ||||||||
Restructured
loans
|
$ | 62.2 | $ | 40.2 | ||||||
Accruing
loans past due 90 days or more
|
||||||||||
Accruing loans
past due 90 days or more
|
$ | 29.6 | $ | 15.8 |
September 30, 2016
|
December 31, 2015
|
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Commercial
Finance
|
$ | 131.1 | 1.59 | % | $ | 131.5 | 1.44 | % | ||||||||||
Real Estate
Finance
|
6.9 | 0.13 | % | 3.6 | 0.07 | % | ||||||||||||
Business
Capital
|
41.9 | 0.61 | % | 56.0 | 0.86 | % | ||||||||||||
Commercial
Banking
|
179.9 | 0.87 | % | 191.1 | 0.91 | % | ||||||||||||
Aerospace
|
5.0 | 0.84 | % | 15.4 | 0.87 | % | ||||||||||||
Maritime
|
49.4 | 3.22 | % | | | |||||||||||||
Transportation Finance
|
54.4 | 2.45 | % | 15.4 | 0.43 | % | ||||||||||||
Other Consumer
Banking
|
0.3 | 0.02 | % | 0.4 | 0.02 | % | ||||||||||||
Legacy Consumer
Mortgages
|
13.9 | 0.28 | % | 4.8 | 0.09 | % | ||||||||||||
Consumer and
Community Banking
|
14.2 | 0.20 | % | 5.2 | 0.07 | % | ||||||||||||
Non-Strategic
Portfolios
|
40.0 | NM | 56.0 | NM | ||||||||||||||
Total
|
$ | 288.5 | 0.96 | % | $ | 267.7 | 0.85 | % |
Forgone
Interest
(dollars in millions)
Nine Months Ended September 30,
|
||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2016
|
2015
|
|||||||||||||||||||||||||
U.S.
|
Foreign
|
Total
|
U.S.
|
Foreign
|
Total
|
|||||||||||||||||||||
Interest
revenue that would have been earned at original terms
|
$ | 20.3 | $ | 4.3 | $ | 24.6 | $ | 18.8 | $ | 7.1 | $ | 25.9 | ||||||||||||||
Less: Interest
recorded
|
(3.4 | ) | (0.3 | ) | (3.7 | ) | (2.9 | ) | (2.0 | ) | (4.9 | ) | ||||||||||||||
Foregone
interest revenue
|
$ | 16.9 | $ | 4.0 | $ | 20.9 | $ | 15.9 | $ | 5.1 | $ | 21.0 |
TDRs
and Modifications
(dollars in millions)
September 30, 2016
|
December 31, 2015
|
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
%
Compliant |
%
Compliant |
|||||||||||||||||
Troubled Debt
Restructurings
|
||||||||||||||||||
Deferral of
principal and/or interest
|
$ | 9.0 | 97 | % | $ | 5.4 | 99 | % | ||||||||||
Interest only
periods
|
9.5 | 100 | % | | | |||||||||||||
Interest rate
reductions
|
8.7 | 100 | % | | | |||||||||||||
Covenant relief
and other
|
35.0 | 96 | % | 34.8 | 88 | % | ||||||||||||
Total
TDRs
|
$ | 62.2 | 97 | % | $ | 40.2 | 90 | % | ||||||||||
Percent
non-accrual
|
87 | % | 63 | % | ||||||||||||||
Modifications
(1)
|
||||||||||||||||||
Extended
maturity
|
$ | 91.6 | 100 | % | $ | 0.2 | 100 | % | ||||||||||
Covenant
relief
|
296.4 | 96 | % | 23.1 | 83 | % | ||||||||||||
Interest rate
increase
|
165.8 | 77 | % | 9.3 | 100 | % | ||||||||||||
Other
|
197.5 | 99 | % | 218.4 | 100 | % | ||||||||||||
Total
Modifications
|
$ | 751.3 | 93 | % | $ | 251.0 | 98 | % | ||||||||||
Percent
non-accrual
|
20 | % | 16 | % |
(1)
|
Table depicts the predominant element of each modification, which may contain several of the characteristics listed. |
Non-interest
Income
(dollars in millions)
Quarters Ended
|
Nine Months Ended
|
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
||||||||||||||||||
Rental income
on operating leases
|
$ | 563.6 | $ | 569.3 | $ | 539.3 | $ | 1,708.3 | $ | 1,601.6 | ||||||||||||
Other
Income:
|
||||||||||||||||||||||
Fee
revenues
|
31.6 | 28.0 | 29.6 | 92.3 | 77.5 | |||||||||||||||||
Factoring
commissions
|
28.8 | 24.1 | 30.9 | 79.3 | 87.4 | |||||||||||||||||
Gains on
sales of leasing equipment
|
22.4 | 28.0 | 30.7 | 61.6 | 84.2 | |||||||||||||||||
Gains on
investments
|
10.3 | 6.3 | 2.0 | 12.5 | 6.5 | |||||||||||||||||
Gains
(losses) on OREO sales
|
3.6 | 3.5 | (3.2 | ) | 8.8 | (3.2 | ) | |||||||||||||||
Gains
(losses) on loan and portfolio sales
|
3.4 | 7.7 | (14.7 | ) | 11.4 | (6.0 | ) | |||||||||||||||
Net (losses)
gains on derivatives and foreign currency exchange
|
(15.7 | ) | 10.4 | (20.0 | ) | 4.0 | (34.7 | ) | ||||||||||||||
Impairment on
assets held for sale
|
(22.0 | ) | (17.0 | ) | (23.6 | ) | (61.1 | ) | (44.7 | ) | ||||||||||||
Other
revenues
|
11.5 | 13.3 | 7.5 | 70.3 | 22.1 | |||||||||||||||||
Total other
income
|
73.9 | 104.3 | 39.2 | 279.1 | 189.1 | |||||||||||||||||
Total
non-interest income
|
$ | 637.5 | $ | 673.6 | $ | 578.5 | $ | 1,987.4 | $ | 1,790.7 |
Quarters Ended
|
Nine Months Ended
|
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
|||||||||||||||||||
Depreciation on
operating lease equipment
|
$ | (179.1 | ) | $ | (176.4 | ) | $ | (159.1 | ) | $ | (530.8 | ) | $ | (473.7 | ) | ||||||||
Maintenance and
other operating lease expenses
|
(60.4 | ) | (64.9 | ) | (55.9 | ) | (181.5 | ) | (151.4 | ) | |||||||||||||
Operating expenses:
|
|||||||||||||||||||||||
Compensation
and benefits
|
(157.8 | ) | (155.9 | ) | (160.4 | ) | (485.9 | ) | (442.5 | ) | |||||||||||||
Professional
fees
|
(47.2 | ) | (39.5 | ) | (57.3 | ) | (125.5 | ) | (97.6 | ) | |||||||||||||
Technology
|
(32.6 | ) | (31.3 | ) | (29.9 | ) | (94.3 | ) | (77.1 | ) | |||||||||||||
Net occupancy
expense
|
(17.8 | ) | (17.4 | ) | (14.8 | ) | (53.6 | ) | (32.8 | ) | |||||||||||||
Advertising
and marketing
|
(4.8 | ) | (4.4 | ) | (7.4 | ) | (14.6 | ) | (23.2 | ) | |||||||||||||
Other
|
(63.1 | ) | (72.9 | ) | (54.0 | ) | (192.6 | ) | (126.0 | ) | |||||||||||||
Operating
expenses, excluding restructuring costs and intangible asset amortization
|
(323.3 | ) | (321.4 | ) | (323.8 | ) | (966.5 | ) | (799.2 | ) | |||||||||||||
Intangible
assets amortization
|
(6.4 | ) | (6.4 | ) | (5.0 | ) | (19.2 | ) | (6.1 | ) | |||||||||||||
Provision for
severance and facilities exiting activities
|
(2.3 | ) | (9.7 | ) | (5.1 | ) | (32.3 | ) | (5.2 | ) | |||||||||||||
Total operating
expenses
|
(332.0 | ) | (337.5 | ) | (333.9 | ) | (1,018.0 | ) | (810.5 | ) | |||||||||||||
Loss on debt
extinguishments and deposit redemptions
|
(5.1 | ) | (4.1 | ) | (0.3 | ) | (10.8 | ) | (0.4 | ) | |||||||||||||
Total
non-interest expenses
|
$ | (576.6 | ) | $ | (582.9 | ) | $ | (549.2 | ) | $ | (1,741.1 | ) | $ | (1,436.0 | ) | ||||||||
Headcount
|
4,650 | 4,650 | 4,960 | ||||||||||||||||||||
Operating
expenses excluding restructuring costs and intangible asset amortization as a % of AEA
(1)
|
(2.19 | )% | (2.17 | )% | (2.47 | )% | (2.18 | )% | (2.36 | )% | |||||||||||||
Net efficiency
ratio
(2)
|
53.1 | % | 49.8 | % | 62.2 | % | 50.7 | % | 59.1 | % |
(1)
|
Operating expenses excluding restructuring costs and intangible asset amortization as a % of AEA is a non-GAAP measure; see Non-GAAP Financial Measurements for a reconciliation of non-GAAP to GAAP financial information. |
(2)
|
Net efficiency ratio is a non-GAAP measurement used by management to measure operating expenses (before restructuring costs and intangible amortization) to the level of total net revenues. See Non-GAAP Financial Measurements for a reconciliation of non-GAAP to GAAP financial information. |
n
|
Compensation and benefits decreased from the year-ago quarter, primarily reflecting the impact of fewer employees. Year to date, the increase reflects the inclusion of expenses associated with the added employees due to the OneWest Bank acquisition for the nine months in the current year compared to two months in the prior year. |
n
|
Professional fees include legal and other professional fees, such as tax, audit, and consulting services. The current and prior quarters include costs related to the integration of OneWest Bank and other strategic initiatives, including the separation of our Commercial Air business. Professional fees in the prior year were driven by OneWest Bank integration costs and costs related to exits of our non-strategic portfolios. Costs related to OneWest Bank integration and other strategic initiatives totaled $20 million for the quarter, $32 million for the year-ago quarter and $17 million for the prior quarter. |
n
|
Technology costs increased from the year-ago quarter reflecting OneWest Bank expense. |
n
|
Net Occupancy expenses were up from the year-ago quarter reflecting the added costs associated with OneWest Bank related to the branch network and office space. |
n
|
Advertising and marketing expenses include costs associated with raising deposits. |
n
|
Provision for severance and facilities exiting activities primarily reflects strategic initiatives to reduce operating expenses and streamline our operations, which resulted in employee reductions compared to the year-ago period. |
n
|
Amortization of intangible assets primarily results from intangible assets recorded in the OneWest Bank acquisition. |
n
|
Other expenses include items such as travel and entertainment, insurance, FDIC costs, office equipment and supplies costs and taxes other than income taxes. The sequential decrease reflects REO assets expenses that related to earlier periods. The increase from the year-ago quarter reflects OneWest Bank expenses for a full quarter. |
Quarters Ended
|
Nine Months Ended
|
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
||||||||||||||||||
Provision for
income taxes, before discrete items
|
$ | 61.4 | $ | 90.4 | $ | 32.6 | $ | 215.6 | $ | 119.6 | ||||||||||||
Discrete
items
|
15.6 | 3.9 | (592.6 | ) | 8.4 | (597.8 | ) | |||||||||||||||
Provision
(benefit) for income taxes
|
$ | 77.0 | 94.3 | $ | (560.0 | ) | $ | 224.0 | $ | (478.2 | ) | |||||||||||
Effective tax
rate
|
34.2 | % | 34.2 | % | (409.4 | )% | 31.8 | % | (109.3 | )% | ||||||||||||
Effective tax
rate, before discrete items
|
27.2 | % | 32.8 | % | 23.8 | % | 30.6 | % | 27.3 | % |
n
|
$16 million tax expense recorded this quarter related to the establishment of valuation allowances against certain international net deferred tax assets due to the exit of our international non-strategic portfolios, |
n
|
$14 million tax benefit, including interest and penalties, recorded in the first quarter resulting from favorable actions taken by the tax authorities related to uncertain tax positions taken on certain prior year non-U.S. tax returns, and |
n
|
$6 million miscellaneous other net tax expense items year to date. |
n
|
$647 million tax benefit recorded in the third quarter corresponding to a reduction to the U.S. federal deferred tax asset valuation allowance after considering the impact on earnings of the OneWest acquisition to support the Companys ability to utilize the U.S. federal net operating losses, |
n
|
$29 million tax expense including interest and penalties recorded in the third quarter related to an uncertain tax position taken on certain prior year international tax returns, |
n
|
$28 million tax expense recorded in the third quarter related to establishment of domestic and international deferred tax liabilities as a result of Managements decision to no longer assert its intent to indefinitely reinvest its unremitted earnings in China, and |
n
|
$9 million tax benefit recorded in the prior quarter corresponding to a reduction of certain tax reserves upon the receipt of a favorable tax ruling on an uncertain tax position taken on prior years tax returns. |
7
|
Effective tax rate excluding discrete items is a non-GAAP measure. See Non-GAAP Measurements for reconciliation of non-GAAP financial information |
Quarters Ended
|
Nine Months Ended
|
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Earnings Summary |
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
||||||||||||||||||
Interest
income
|
$ | 285.0 | $ | 289.2 | $ | 251.5 | $ | 861.3 | $ | 618.7 | |||||||||||||
Rental income
on operating leases
|
31.9 | 28.7 | 24.6 | 87.7 | 71.5 | ||||||||||||||||||
Finance
revenue
|
316.9 | 317.9 | 276.1 | 949.0 | 690.2 | ||||||||||||||||||
Interest
expense
|
(76.2 | ) | (74.7 | ) | (67.3 | ) | (224.5 | ) | (196.8 | ) | |||||||||||||
Depreciation on
operating lease equipment
|
(24.4 | ) | (21.5 | ) | (18.1 | ) | (65.9 | ) | (52.8 | ) | |||||||||||||
Net finance
revenue (NFR)
|
216.3 | 221.7 | 190.7 | 658.6 | 440.6 | ||||||||||||||||||
Provision for
credit losses
|
(39.2 | ) | (11.4 | ) | (43.2 | ) | (124.1 | ) | (85.6 | ) | |||||||||||||
Other
income
|
65.9 | 60.9 | 70.7 | 182.3 | 201.6 | ||||||||||||||||||
Operating
expenses
|
(161.2 | ) | (148.8 | ) | (146.5 | ) | (468.3 | ) | (410.5 | ) | |||||||||||||
Income before
provision for income taxes
|
$ | 81.8 | $ | 122.4 | $ | 71.7 | $ | 248.5 | $ | 146.1 | |||||||||||||
Select Period End Balance
|
|||||||||||||||||||||||
Financing and
leasing assets
|
$ | 21,245.0 | $ | 21,496.3 | $ | 22,274.8 | $ | 21,245.0 | $ | 22,274.8 | |||||||||||||
Earning
assets
|
21,454.0 | 21,740.5 | 22,818.2 | 21,454.0 | 22,818.2 |
Commercial
Banking: Financial Data and Metrics
(dollars in millions) (continued)
Quarters Ended
|
Nine Months Ended
|
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
|||||||||||||||||||
Select Average Balances
|
|||||||||||||||||||||||
Average
finance receivables (AFR)
|
$ | 20,691.1 | $ | 21,040.7 | $ | 19,356.9 | $ | 20,930.4 | $ | 16,490.1 | |||||||||||||
Average
earning assets (AEA)
(1)
|
20,385.1 | 20,575.1 | 18,724.0 | 20,526.5 | 15,846.5 | ||||||||||||||||||
Statistical Data
|
|||||||||||||||||||||||
Net
efficiency ratio
|
56.6 | % | 52.1 | % | 55.4 | % | 55.1 | % | 63.5 | % | |||||||||||||
Pretax return
on AEA
|
1.61 | % | 2.38 | % | 1.53 | % | 1.61 | % | 1.23 | % | |||||||||||||
New business
volume
|
$ | 1,889.4 | $ | 2,048.4 | $ | 1,960.2 | $ | 5,519.2 | $ | 4,779.8 | |||||||||||||
Factoring
volume
|
$ | 6,683.8 | $ | 5,529.3 | $ | 6,773.5 | $ | 18,086.9 | $ | 19,090.4 | |||||||||||||
Select Divisional Data
|
|||||||||||||||||||||||
Net finance revenue:
|
|||||||||||||||||||||||
Commercial
Finance
|
$ | 88.5 | $ | 94.5 | $ | 79.9 | $ | 273.6 | $ | 169.0 | |||||||||||||
Real Estate
Finance
|
51.5 | 51.6 | 37.1 | 157.5 | 58.2 | ||||||||||||||||||
Business
Capital
|
76.3 | 75.6 | 73.7 | 227.5 | 213.4 | ||||||||||||||||||
Segment
total
|
$ | 216.3 | $ | 221.7 | $ | 190.7 | $ | 658.6 | $ | 440.6 | |||||||||||||
Net finance margin NFR as a % of AEA
|
|||||||||||||||||||||||
Commercial
Finance
|
4.00 | % | 4.08 | % | 3.59 | % | 3.96 | % | 3.01 | % | |||||||||||||
Real Estate
Finance
|
3.74 | % | 3.78 | % | 3.72 | % | 3.87 | % | 3.04 | % | |||||||||||||
Business
Capital
|
5.07 | % | 5.16 | % | 5.06 | % | 5.15 | % | 4.89 | % | |||||||||||||
Segment
total
|
4.24 | % | 4.31 | % | 4.07 | % | 4.28 | % | 3.71 | % |
(1)
|
AEA is lower than AFR as it is reduced by the average credit balances for factoring clients. |
n
|
The net finance revenue increased from the year-ago quarter, reflecting a full quarter of purchase accounting accretion on loans acquired from OneWest Bank. The decrease from the prior quarter was primarily due to an interest recovery on a loan previously charged off recognized last quarter. Purchase accounting accretion benefiting NFR totaled $37 million, $25 million and $38 million in the current, year-ago and prior quarters, respectively. Year to date 2016 benefited from $115 million of purchase accounting accretion. (Purchase accounting accretion is depicted in tabular form in the Net Finance Revenue section). The current and prior quarters included $17 million and $16 million, respectively, of PAA that was accelerated due to prepayments ($48 million year to date). Gross yields were up from both the year-ago and prior quarters due to a change in portfolio mix, with an increase in Business Capital volume. The increase compared to the year-ago quarter also reflects benefits of a full quarter of purchase accounting accretion from the OneWest Bank acquisition. See Select Segment and Division Margin Metrics table in Net Finance Revenue section for amounts of purchase accounting accretion and gross yields by division. |
n
|
Other income decreased from the year-ago quarter and increased from the prior quarter, reflecting the following: |
n
|
Factoring commissions of $29 million were down from the year-ago quarter reflecting mix and market conditions but up from the prior quarter due to seasonally higher factoring volume. |
n
|
Gains on asset sales (including receivables, equipment and investments) totaled $6 million, down from $13 million in the year-ago quarter and from $10 million in the prior quarter reflecting modest gains on sales of highly leveraged loans in the Commercial Finance division in the current quarter and the benefit of purchase accounting acceleration on loan sales in the prior quarter. Financing and Leasing assets sold totaled $220 million in the current quarter, compared to $131 million in the year-ago quarter and $224 million in the prior quarter. The sales activity in the current and prior quarter primarily reflected risk management actions to reduce certain highly leveraged loans in the Commercial Finance division. |
n
|
Fee revenue is mainly driven by fees on lines of credit and letters of credit, capital markets-related fees, agent and advisory fees, and servicing fees for the assets we sell but retain servicing. Fee revenue was $25 million in the current quarter, up from $24 million in the year-ago quarter and $22 million in the prior quarter, primarily driven by higher capital market fees in the Commercial Finance division. |
n
|
The provision for credit losses returned to a more normalized level, $39 million, in the current quarter, compared to a low of $11 million in the prior quarter, and $43 million in the year-ago quarter. The increase in provision from the prior quarter resulted from increases in the allowance for loan losses due to modest increases across divisions. Net charge-offs were $22 million (0.42% of average finance receivables), compared to $35 million (0.66%) in the prior quarter and $18 million (0.38%) in the year-ago quarter. Excluding assets transferred to held for sale in all periods, net charge-offs were $15 million in the current quarter, compared to $16 million in the prior quarter and $18 million in the year-ago quarter. Year to date, net charge-offs were $88 million (0.56%), $27 million of which related to assets transferred to held for sale, compared to charge offs of $63 million (0.51%), $13 million of which related to assets transferred to held for sale for the nine months ended September 2015. Non-accrual loans were $180 million (0.87% of finance receivables), compared to $208 million (1.00%) at June 30, 2016, and $147 million (0.67%) a year-ago. While the decrease from the prior quarter was related to a decline in non-accrual loans in the energy sector, non-accrual loans in this sector drove the increase from the year-ago quarter, partially offset by lower non-accrual balances in Business Capital. |
n
|
Operating expenses increased from the prior quarter and reflects higher sales and local taxes in Equipment Finance. The increase from the 2015 periods also reflects the impact of a full quarter and year to date amounts of OneWest Bank expenses. |
Quarters Ended
|
Nine Months Ended
|
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Earnings Summary |
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
||||||||||||||||||
Interest
income
|
$ | 51.3 | $ | 49.9 | $ | 50.2 | $ | 153.9 | $ | 137.3 | |||||||||||||
Rental income
on operating leases
|
527.9 | 536.6 | 505.7 | 1,609.0 | 1,500.3 | ||||||||||||||||||
Finance
revenue
|
579.2 | 586.5 | 555.9 | 1,762.9 | 1,637.6 | ||||||||||||||||||
Interest
expense
|
(146.7 | ) | (146.5 | ) | (139.7 | ) | (441.3 | ) | (439.0 | ) | |||||||||||||
Depreciation on
operating lease equipment
|
(154.7 | ) | (154.9 | ) | (137.5 | ) | (464.9 | ) | (410.1 | ) | |||||||||||||
Maintenance and
other operating lease expenses
|
(60.4 | ) | (64.9 | ) | (55.9 | ) | (181.5 | ) | (151.4 | ) | |||||||||||||
Net finance
revenue (NFR)
|
217.4 | 220.2 | 222.8 | 675.2 | 637.1 | ||||||||||||||||||
Provision for
credit losses
|
(5.5 | ) | (15.6 | ) | 1.6 | (43.8 | ) | (5.9 | ) | ||||||||||||||
Other
income
|
6.5 | 11.7 | 23.0 | 37.0 | 72.2 | ||||||||||||||||||
Operating
expenses
|
(61.8 | ) | (62.2 | ) | (53.6 | ) | (184.7 | ) | (184.6 | ) | |||||||||||||
Income before
provision for income taxes
|
$ | 156.6 | $ | 154.1 | $ | 193.8 | $ | 483.7 | $ | 518.8 | |||||||||||||
Select
Period End Balance
|
|||||||||||||||||||||||
Financing and
leasing assets
|
$ | 19,915.0 | $ | 19,963.5 | $ | 18,735.1 | $ | 19,915.0 | $ | 18,735.1 | |||||||||||||
Earning
assets
|
20,950.4 | 20,960.2 | 19,261.8 | 20,950.4 | 19,261.8 | ||||||||||||||||||
Select Average Balances
|
|||||||||||||||||||||||
Average
finance receivables (AFR)
|
$ | 2,526.6 | $ | 2,726.0 | $ | 3,246.0 | $ | 2,894.4 | $ | 3,080.6 | |||||||||||||
Average
operating leases (AOL)
|
16,581.3 | 16,477.3 | 14,977.9 | 16,476.7 | 14,785.3 | ||||||||||||||||||
Average
earning assets (AEA)
|
20,953.0 | 20,945.7 | 19,009.2 | 20,818.5 | 18,972.2 | ||||||||||||||||||
Statistical Data
|
|||||||||||||||||||||||
Net operating
lease revenue rental income, net of depreciation and maintenance and other operating lease expenses
|
$ | 312.8 | $ | 316.8 | $ | 312.3 | $ | 962.6 | $ | 938.8 | |||||||||||||
Operating
lease margin as a % of AOL
|
7.55 | % | 7.69 | % | 8.34 | % | 7.79 | % | 8.47 | % | |||||||||||||
Net
efficiency ratio
|
27.6 | % | 26.1 | % | 21.8 | % | 25.7 | % | 26.0 | % | |||||||||||||
Pretax return
on AEA
|
2.99 | % | 2.94 | % | 4.08 | % | 3.10 | % | 3.65 | % | |||||||||||||
New business
volume
|
$ | 372.0 | $ | 461.0 | $ | 1,144.0 | $ | 1,078.9 | $ | 2,307.3 | |||||||||||||
Select Divisional Data
|
|||||||||||||||||||||||
Net finance
revenue:
|
|||||||||||||||||||||||
Aerospace
|
$ | 124.8 | $ | 110.6 | $ | 111.2 | $ | 355.0 | $ | 311.9 | |||||||||||||
Rail
|
77.5 | 94.0 | 98.7 | 271.7 | 293.0 | ||||||||||||||||||
Maritime
Finance
|
15.1 | 15.6 | 12.9 | 48.5 | 32.2 | ||||||||||||||||||
Segment
total
|
$ | 217.4 | $ | 220.2 | $ | 222.8 | $ | 675.2 | $ | 637.1 | |||||||||||||
Net finance margin NFR as a % of AEA
|
|||||||||||||||||||||||
Aerospace
|
4.10 | % | 3.61 | % | 3.95 | % | 3.90 | % | 3.58 | % | |||||||||||||
Rail
|
4.33 | % | 5.34 | % | 6.25 | % | 5.16 | % | 6.38 | % | |||||||||||||
Maritime
Finance
|
3.76 | % | 3.77 | % | 3.58 | % | 3.92 | % | 3.48 | % | |||||||||||||
Segment
total
|
4.15 | % | 4.21 | % | 4.69 | % | 4.32 | % | 4.48 | % |
n
|
Net finance revenue was down slightly from the prior quarter, on lower rentals in rail. Net finance revenue decreased from the year-ago quarter, as higher average operating lease assets were partially offset by lower average yields, reflective of pressure on certain rental rates and utilization. Net finance margin was down from the prior and year-ago quarters reflecting the net finance revenue trends described above, and relatively stable funding costs. |
n
|
Gross yields in Aerospace were up slightly from the prior quarter to 11.04%, while gross yields in Rail of 12.38% were down primarily on lower renewal rates. Rail utilization remained at 94% compared to June 30, 2016, and down from 96% at December 31, 2015, reflecting pressures mostly from the crude, coal and steel industries. Demand for crude, coal and steel cars continues to be soft, therefore we still expect railcar utilization to move toward the low 90% range and rental rates to decline as leases re-new. About 41% of the total railcar order-book has lease commitments. See Select Segment and Division Margin Metrics table in Net Finance Revenue section. |
n
|
Net operating lease revenue, which is a component of NFR, was flat with the year-ago quarter, as increased rental income from growth in the Aerospace and Rail divisions was offset by higher depreciation and maintenance and operating lease expenses. Compared to the prior quarter, net operating lease revenue was down slightly, on lower rents on the rail portfolio, reflective of lower renewal rates. The decline in the operating lease margin (as a percentage of average operating lease equipment) reflects these trends. |
n
|
Commercial aircraft utilization was 99%, with all but two aircraft on lease or under a commitment, down slightly from the prior quarter and year-end when all aircraft were on lease or under a commitment. All of our aircraft scheduled for delivery in the next 12 months have commitments. |
n
|
The current quarter new business volume included the delivery of one aircraft and approximately 2,000 railcars. The prior quarter new business volume included $457 million of operating lease equipment, including the delivery of six aircraft and approximately 1,700 railcars. |
n
|
Other income was down from the year-ago and prior quarters and primarily includes: |
n
|
Gains on asset sales totaled $20 million in 2016 on $100 million of asset sales, $22 million on $375 million of asset sales in the year-ago quarter, and $25 million of gains on $107 million of asset sales in the prior quarter. Year-to-date, gains on asset sales totaled $54 million in 2016 on $245 million of asset sales compared to $60 million on $858 million of equipment and receivable sales in 2015. |
n
|
Impairments on assets held for sale totaled $18 million in the current quarter, driven by business air assets in AHFS. Impairments were $1 million in the year-ago quarter and $18 million in the prior quarter, primarily driven by scrapping of railcars. Year-to-date, impairments on assets held for sale was approximately $38 million in 2016 and $4 million in 2015. |
n
|
Other income also includes a small amount of fee income, along with other revenue derived from loan commitments, joint ventures and other periodic items, such as a settlement from a bankrupt airline in the prior quarter. |
n
|
Non-accrual loans were $54 million (2.45% of finance receivables), compared to $18 million (0.70%) at June 30, 2016 and $15 million (0.43%) at December 31, 2015. The current quarter increase was due to the addition of a $49 million maritime finance account, while the other periods principally consisted of business aircraft loans. Net charge-offs were $2 million (0.33% of average finance receivables) in the current quarter, and primarily related to assets transferred to held for sale. Net charge-offs were $7 million (0.97%) in the prior quarter, primarily related to business air assets transferred to held for sale. Excluding assets |
|
transferred to held for sale, net charge-offs in the each of the quarters were less than $1 million. Year to date, net charge-offs were $28 million (1.30%), $16 million of which related to assets transferred to held for sale. The current and prior quarter provision for credit losses was driven by general reserve builds on the Maritime portfolio, while the prior quarter also included two Aerospace loan charge-offs. |
n
|
Operating expenses were relatively flat with the prior quarter as higher costs related to the commercial air separation offset lower employee costs. The current and prior quarter included $10 million and $9 million of costs related to the commercial air separation initiative, respectively. |
Consumer
and Community Banking: Financial Data and Metrics
(dollars in millions)
Quarters Ended
|
Nine Months Ended
|
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Earnings Summary |
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
|||||||||||||||||
Interest
income
|
$ | 102.9 | $ | 105.4 | $ | 73.9 | $ | 311.5 | $ | 73.9 | ||||||||||||
Interest
expense
|
(1.9 | ) | (5.9 | ) | (13.8 | ) | (16.7 | ) | (13.8 | ) | ||||||||||||
Net finance
revenue (NFR)
|
101.0 | 99.5 | 60.1 | 294.8 | 60.1 | |||||||||||||||||
Provision for
credit losses
|
(1.6 | ) | (1.1 | ) | (5.1 | ) | (5.8 | ) | (5.1 | ) | ||||||||||||
Other
income
|
7.1 | 11.7 | 0.1 | 26.9 | 0.1 | |||||||||||||||||
Operating
expenses
|
(87.7 | ) | (93.2 | ) | (59.0 | ) | (263.2 | ) | (59.0 | ) | ||||||||||||
Income (loss)
before provision for income taxes
|
$ | 18.8 | $ | 16.9 | $ | (3.9 | ) | $ | 52.7 | $ | (3.9 | ) | ||||||||||
Select
Period End Balance
|
||||||||||||||||||||||
Financing and
leasing assets
|
$ | 7,171.0 | $ | 7,171.8 | $ | 7,297.0 | $ | 7,171.0 | $ | 7,297.0 | ||||||||||||
Earning
assets
|
7,667.2 | 7,687.0 | 7,914.9 | 7,667.2 | 7,914.9 |
Quarters Ended
|
Nine Months Ended
|
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
|||||||||||||||||||
Select Average Balances
|
|||||||||||||||||||||||
Average finance
receivables (AFR)
|
$ | 7,115.9 | $ | 7,155.6 | $ | 4,705.4 | $ | 7,140.9 | $ | 1,586.3 | |||||||||||||
Average earning
assets (AEA)
|
7,658.1 | 7,728.6 | 5,127.5 | 7,711.9 | 1,728.5 | ||||||||||||||||||
Statistical
Data
|
|||||||||||||||||||||||
Net
efficiency ratio
|
76.8 | % | 79.6 | % | 92.7 | % | 77.5 | % | 92.7 | % | |||||||||||||
Pretax return
on AEA
|
0.98 | % | 0.87 | % | (0.30 | )% | 0.91 | % | (0.30 | )% | |||||||||||||
New business
volume
|
$ | 289.0 | $ | 261.3 | $ | 29.6 | $ | 764.7 | $ | 29.6 | |||||||||||||
Select Divisional Data
|
|||||||||||||||||||||||
Net finance revenue:
|
|||||||||||||||||||||||
Other
consumer banking
|
$ | 40.5 | $ | 37.1 | $ | 13.3 | $ | 111.6 | $ | 13.3 | |||||||||||||
LCM
|
60.5 | 62.4 | 46.8 | 183.2 | 46.8 | ||||||||||||||||||
Segment
total
|
$ | 101.0 | $ | 99.5 | $ | 60.1 | $ | 294.8 | $ | 60.1 | |||||||||||||
Net finance margin NFR as a % of AEA
|
|||||||||||||||||||||||
Other
consumer banking
|
7.45 | % | 7.16 | % | 4.56 | % | 7.22 | % | 4.49 | % | |||||||||||||
LCM
|
4.41 | % | 4.41 | % | 4.73 | % | 4.32 | % | 4.68 | % | |||||||||||||
Segment
total
|
5.28 | % | 5.15 | % | 4.69 | % | 5.10 | % | 4.64 | % |
n
|
NFR was up slightly from the prior quarter. NFR also benefits from purchase accounting accretion. There was $29 million and $35 million of purchase accounting accretion in the current and prior quarters, compared to $24 million in the prior-year quarter. |
n
|
Other income included gains on REO properties, fee revenue and other miscellaneous income. Gains on OREO properties totaled approximately $4 million each in the current and prior quarter, compared to a loss of $3 million in the prior-year quarter. While fee revenue was fairly consistent across the quarters at approximately $3 million each, other revenue was down in the current quarter reflecting a fair value adjustment loss of approximately $1 million for the FDIC Receivable measured at fair value. |
n
|
Non-accrual loans were $14 million (0.20% of finance receivables) at September 30, 2016, up from $12 million (0.16%) at June 30, 2016, and $5 million (0.07%) at December 31, 2015. The increase from the prior year is due to slight deterioration in the LCM portfolio. |
n
|
Operating expenses are reflective of the inclusion of branch operation costs, which also causes the net efficiency ratio to be higher than other segments. The decline from the prior quarter is due to decreased REO expenses. |
Quarters Ended
|
Nine Months Ended
|
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Earnings Summary |
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
||||||||||||||||||
Interest
income
|
$ | 22.6 | $ | 23.2 | $ | 43.7 | $ | 70.8 | $ | 145.3 | |||||||||||||
Rental income
on operating leases
|
3.8 | 4.0 | 9.0 | 11.6 | 29.8 | ||||||||||||||||||
Finance
revenue
|
26.4 | 27.2 | 52.7 | 82.4 | 175.1 | ||||||||||||||||||
Interest
expense
|
(12.7 | ) | (13.7 | ) | (27.3 | ) | (40.9 | ) | (99.3 | ) | |||||||||||||
Depreciation on
operating lease equipment
|
| | (3.5 | ) | | (10.8 | ) | ||||||||||||||||
Net finance
revenue (NFR)
|
13.7 | 13.5 | 21.9 | 41.5 | 65.0 | ||||||||||||||||||
Provision for
credit losses
|
0.1 | | (3.2 | ) | 0.1 | (6.3 | ) | ||||||||||||||||
Other
income
|
4.9 | 6.7 | (35.4 | ) | 26.1 | (42.6 | ) | ||||||||||||||||
Operating
expenses
|
(11.0 | ) | (12.1 | ) | (26.0 | ) | (35.2 | ) | (97.6 | ) | |||||||||||||
Income (loss)
before provision for income taxes
|
$ | 7.7 | $ | 8.1 | $ | (42.7 | ) | $ | 32.5 | $ | (81.5 | ) | |||||||||||
Select Period End Balance
|
|||||||||||||||||||||||
Financing and
leasing assets
|
$ | 1,004.1 | $ | 1,093.1 | $ | 1,791.8 | $ | 1,004.1 | $ | 1,791.8 | |||||||||||||
Earning
assets
|
1,195.9 | 1,341.4 | 2,062.1 | 1,195.9 | 2,062.1 | ||||||||||||||||||
Select
Average Balances
|
|||||||||||||||||||||||
Average finance
receivables (AFR)
|
$ | | $ | | $ | 1,339.1 | $ | | $ | 1,276.6 | |||||||||||||
Average earning
assets (AEA)
|
1,283.8 | 1,384.5 | 2,284.3 | 1,398.7 | 2,514.6 | ||||||||||||||||||
Statistical Data
|
|||||||||||||||||||||||
Net finance
margin NFR as a % of AEA
|
4.27 | % | 3.90 | % | 3.83 | % | 3.96 | % | 3.45 | % | |||||||||||||
Pretax return
on AEA
|
2.40 | % | 2.34 | % | (7.48 | )% | 3.10 | % | (4.32 | )% | |||||||||||||
New business
volume
|
$ | 45.7 | $ | 61.1 | $ | 184.4 | $ | 151.1 | $ | 601.3 |
n
|
Net finance revenue (NFR) was up slightly compared to the prior quarter, but down from the year-ago quarter on lower earning assets. |
n
|
Other income for the current and prior quarters primarily reflects miscellaneous items, such as recoveries of amounts previously charged off, while the 2016 year to date includes a gain of $24 million from the sale of the U.K. business for the quarter ended March 31, 2016. The prior-year periods included loss on asset sales, CTA losses, mostly related to the sale of the Mexico business, and impairment charges on AHFS. |
n
|
Operating expenses were down, primarily reflecting lower cost due to sales of businesses and run-off of assets. |
Quarters Ended
|
Nine Months Ended
|
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Earnings Summary |
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
||||||||||||||||||
Interest
income
|
$ | 28.3 | $ | 27.6 | $ | 18.4 | $ | 83.3 | $ | 27.3 | |||||||||||||
Interest
expense
|
(41.9 | ) | (41.7 | ) | (32.2 | ) | (124.9 | ) | (67.9 | ) | |||||||||||||
Net finance
revenue (NFR)
|
(13.6 | ) | (14.1 | ) | (13.8 | ) | (41.6 | ) | (40.6 | ) | |||||||||||||
Other
income
|
(10.5 | ) | 13.3 | (19.2 | ) | 6.8 | (42.2 | ) | |||||||||||||||
Operating
expenses
|
(15.4 | ) | (25.3 | ) | (49.1 | ) | (77.4 | ) | (59.2 | ) | |||||||||||||
Loss before
provision for income taxes
|
$ | (39.5 | ) | $ | (26.1 | ) | $ | (82.1 | ) | $ | (112.2 | ) | $ | (142.0 | ) | ||||||||
Select Average Balances
|
|||||||||||||||||||||||
Average earning
assets (AEA)
|
$ | 8,725.4 | $ | 8,595.3 | $ | 7,303.1 | $ | 8,662.6 | $ | 6,081.1 | |||||||||||||
Statistical Data
|
|||||||||||||||||||||||
Pretax return
on AEA
|
(1.81 | )% | (1.21 | )% | (4.50 | )% | (1.73 | )% | (3.11 | )% |
n
|
Interest income consists of interest and dividend income, primarily from investment securities and deposits held at other depository institutions. The increase from the year-ago periods reflects additional income from the OneWest Bank acquisition and the associated investment portfolio. |
n
|
Interest expense is allocated to the segments. Interest expense held in Corporate represents amounts in excess of these allocations and amounts related to excess liquidity. |
n
|
Other income primarily reflects gains and (losses) on derivatives, including the TRS, fair value adjustment on certain MBS securities carried at fair value, and foreign currency exchange. The TRS had a mark-to-market charge of $20 million in the current quarter, compared to a mark-to-market charge of $24 million in the year-ago quarter and a mark-to-market benefit of $9 million in the prior quarter. Other income in the current quarter also includes a gain of $10 million from the MBS securities portfolio carried at fair value, compared to a $5 million gain in the prior quarter. The 2015 year to date period also included $9 million related to the write-off of other receivables that was fully offset with a benefit to the tax provision. |
n
|
Operating expenses reflects salary and general and administrative expenses in excess of amounts allocated to the business segments. Operating expenses were down in the current quarter compared to the year-ago quarter, which included costs associated with the OneWest Bank acquisition. Compared to the prior quarter, operating expenses were down from the prior quarter mostly driven by lower provision for severance and facilities exiting activities, which was $2 million during the current quarter, compared to $5 million in the year-ago quarter and $10 million in the prior quarter. |
September 30, 2016
|
June 30, 2016
|
December 31, 2015
|
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Commercial
Banking
|
|||||||||||||||
Loans
|
$ | 20,564.7 | $ | 20,709.8 | $ | 20,929.2 | |||||||||
Operating lease
equipment, net
|
348.6 | 314.8 | 259.0 | ||||||||||||
Assets held for
sale
|
331.7 | 471.7 | 414.9 | ||||||||||||
Financing and leasing assets
|
21,245.0 | 21,496.3 | 21,603.1 | ||||||||||||
Commercial Finance
|
|||||||||||||||
Loans
|
8,257.2 | 8,512.9 | 9,118.6 | ||||||||||||
Assets held for sale
|
322.8 | 461.3 | 313.6 | ||||||||||||
Financing and leasing assets
|
8,580.0 | 8,974.2 | 9,432.2 | ||||||||||||
Real Estate Finance
|
|||||||||||||||
Loans
|
5,413.9 | 5,566.1 | 5,300.6 | ||||||||||||
Assets held for sale
|
| | 57.0 | ||||||||||||
Financing and leasing assets
|
5,413.9 | 5,566.1 | 5,357.6 | ||||||||||||
Business Capital
|
|||||||||||||||
Loans
|
6,893.6 | 6,630.8 | 6,510.0 | ||||||||||||
Operating lease equipment, net
|
348.6 | 314.8 | 259.0 | ||||||||||||
Assets held for sale
|
8.9 | 10.4 | 44.3 | ||||||||||||
Financing and leasing assets
|
7,251.1 | 6,956.0 | 6,813.3 | ||||||||||||
Transportation Finance
|
|||||||||||||||
Loans
|
2,224.2 | 2,613.1 | 3,542.1 | ||||||||||||
Operating lease
equipment, net
|
16,606.2 | 16,549.8 | 16,358.0 | ||||||||||||
Assets held for
sale
|
1,084.6 | 800.6 | 54.9 | ||||||||||||
Financing and leasing assets
|
19,915.0 | 19,963.5 | 19,955.0 | ||||||||||||
Aerospace
|
|||||||||||||||
Loans
|
585.3 | 904.4 | 1,762.3 | ||||||||||||
Operating lease equipment, net
|
9,571.7 | 9,685.6 | 9,765.2 | ||||||||||||
Assets held for sale
|
1,055.4 | 764.1 | 34.7 | ||||||||||||
Financing and leasing assets
|
11,212.4 | 11,354.1 | 11,562.2 | ||||||||||||
Rail
|
|||||||||||||||
Loans
|
106.3 | 106.9 | 120.9 | ||||||||||||
Operating lease equipment, net
|
7,034.5 | 6,864.2 | 6,592.8 | ||||||||||||
Assets held for sale
|
0.4 | 6.9 | 0.7 | ||||||||||||
Financing and leasing assets
|
7,141.2 | 6,978.0 | 6,714.4 | ||||||||||||
Maritime Finance
|
|||||||||||||||
Loans
|
1,532.6 | 1,601.8 | 1,658.9 | ||||||||||||
Assets held for sale
|
28.8 | 29.6 | 19.5 | ||||||||||||
Financing and leasing assets
|
1,561.4 | 1,631.4 | 1,678.4 | ||||||||||||
Consumer and
Community Banking
|
|||||||||||||||
Loans
|
7,129.3 | 7,133.9 | 7,200.4 | ||||||||||||
Assets held for
sale
|
41.7 | 37.9 | 45.1 | ||||||||||||
Financing and leasing assets
|
7,171.0 | 7,171.8 | 7,245.5 | ||||||||||||
Other Consumer Banking
|
|||||||||||||||
Loans
|
2,121.3 | 1,977.1 | 1,770.0 | ||||||||||||
Assets held for sale
|
8.9 | 3.3 | 3.9 | ||||||||||||
Financing and leasing assets
|
2,130.2 | 1,980.4 | 1,773.9 | ||||||||||||
Legacy Consumer Mortgages
|
|||||||||||||||
Loans
|
5,008.0 | 5,156.8 | 5,430.4 | ||||||||||||
Assets held for sale
|
32.8 | 34.6 | 41.2 | ||||||||||||
Financing and leasing assets
|
5,040.8 | 5,191.4 | 5,471.6 | ||||||||||||
Non-Strategic Portfolios
|
|||||||||||||||
Loans
|
| | | ||||||||||||
Operating lease
equipment, net
|
| | | ||||||||||||
Assets held for
sale
|
1,004.1 | 1,093.1 | 1,577.5 | ||||||||||||
Financing and leasing assets
|
1,004.1 | 1,093.1 | 1,577.5 | ||||||||||||
Total
financing and leasing assets
|
$ | 49,335.1 | $ | 49,724.7 | $ | 50,381.1 |
Commercial
Banking |
Transportation
Finance |
Consumer and
Community Banking |
Non-
Strategic Portfolios |
Total
|
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at
June 30, 2016
|
$ | 21,496.3 | $ | 19,963.5 | $ | 7,171.8 | $ | 1,093.1 | $ | 49,724.7 | ||||||||||||
New business
volume
|
1,889.4 | 372.0 | 289.0 | 45.7 | 2,596.1 | |||||||||||||||||
Loan and
portfolio sales
|
(173.3 | ) | (18.1 | ) | (28.6 | ) | | (220.0 | ) | |||||||||||||
Equipment
sales
|
(46.8 | ) | (81.9 | ) | | (23.5 | ) | (152.2 | ) | |||||||||||||
Depreciation
|
(24.4 | ) | (154.7 | ) | | | (179.1 | ) | ||||||||||||||
Gross
charge-offs
|
(27.7 | ) | (2.1 | ) | (0.7 | ) | | (30.5 | ) | |||||||||||||
Collections and
other
|
(1,868.5 | ) | (163.7 | ) | (260.5 | ) | (111.2 | ) | (2,403.9 | ) | ||||||||||||
Balance at
September 30, 2016
|
$ | 21,245.0 | $ | 19,915.0 | $ | 7,171.0 | $ | 1,004.1 | $ | 49,335.1 | ||||||||||||
Balance at
December 31, 2015
|
$ | 21,603.1 | $ | 19,955.0 | $ | 7,245.5 | $ | 1,577.5 | $ | 50,381.1 | ||||||||||||
New business
volume
|
5,519.2 | 1,078.9 | 764.7 | 151.1 | 7,513.9 | |||||||||||||||||
Portfolio /
business purchases
|
| 64.1 | | | 64.1 | |||||||||||||||||
Loan and
portfolio sales
|
(443.6 | ) | (18.1 | ) | (71.7 | ) | (20.1 | ) | (553.5 | ) | ||||||||||||
Equipment
sales
|
(130.2 | ) | (227.1 | ) | | (46.4 | ) | (403.7 | ) | |||||||||||||
Depreciation
|
(65.9 | ) | (464.9 | ) | | | (530.8 | ) | ||||||||||||||
Gross
charge-offs
|
(101.5 | ) | (28.3 | ) | (1.9 | ) | | (131.7 | ) | |||||||||||||
Collections and
other
|
(5,136.1 | ) | (444.6 | ) | (765.6 | ) | (658.0 | ) | (7,004.3 | ) | ||||||||||||
Balance at
September 30, 2016
|
$ | 21,245.0 | $ | 19,915.0 | $ | 7,171.0 | $ | 1,004.1 | $ | 49,335.1 |
New
Business Volume
(dollars in millions)
Quarters Ended
|
Nine Months Ended
|
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
||||||||||||||||||
Commercial
Banking
|
$ | 1,889.4 | $ | 2,048.4 | $ | 1,960.2 | $ | 5,519.2 | $ | 4,779.8 | ||||||||||||
Transportation
Finance
|
372.0 | 461.0 | 1,144.0 | 1,078.9 | 2,307.3 | |||||||||||||||||
Consumer and
Community Banking
|
289.0 | 261.3 | 29.6 | 764.7 | 29.6 | |||||||||||||||||
Non-Strategic
Portfolios
|
45.7 | 61.1 | 184.4 | 151.1 | 601.3 | |||||||||||||||||
Total
|
$ | 2,596.1 | $ | 2,831.8 | $ | 3,318.2 | $ | 7,513.9 | $ | 7,718.0 |
Loan
and Portfolio Sales
(dollars in millions)
Quarters Ended
|
Nine Months Ended
|
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
||||||||||||||||||
Commercial
Banking
|
$ | 173.3 | $ | 186.9 | $ | 90.1 | $ | 443.6 | $ | 182.8 | ||||||||||||
Transportation
Finance
|
18.1 | | 42.2 | 18.1 | 65.6 | |||||||||||||||||
Consumer and
Community Banking
|
28.6 | 32.6 | 3.4 | 71.7 | 3.4 | |||||||||||||||||
Non-Strategic
Portfolios
|
| | 185.3 | 20.1 | 200.2 | |||||||||||||||||
Total
|
$ | 220.0 | $ | 219.5 | $ | 321.0 | $ | 553.5 | $ | 452.0 |
Equipment
Sales
(dollars in millions)
Quarters Ended
|
Nine Months Ended
|
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
||||||||||||||||||
Commercial
Banking
|
$ | 46.8 | $ | 37.1 | $ | 41.2 | $ | 130.2 | $ | 116.2 | ||||||||||||
Transportation
Finance
|
81.9 | 106.8 | 332.8 | 227.1 | 791.9 | |||||||||||||||||
Non-Strategic
Portfolios
|
23.5 | 12.4 | 24.6 | 46.4 | 82.6 | |||||||||||||||||
Total
|
$ | 152.2 | $ | 156.3 | $ | 398.6 | $ | 403.7 | $ | 990.7 |
Total
Financing and Leasing Assets by Geographic Region
(dollars in millions)
September 30, 2016
|
December 31, 2015
|
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
West
|
$ | 12,174.2 | 24.7 | % | $ | 12,208.3 | 24.2 | % | ||||||||||
Northeast
|
9,601.6 | 19.5 | % | 9,383.2 | 18.6 | % | ||||||||||||
Southwest
|
4,702.2 | 9.5 | % | 4,785.5 | 9.5 | % | ||||||||||||
Southeast
|
4,450.5 | 9.0 | % | 4,672.3 | 9.3 | % | ||||||||||||
Midwest
|
4,389.6 | 8.9 | % | 4,446.3 | 8.8 | % | ||||||||||||
Total
U.S.
|
35,318.1 | 71.6 | % | 35,495.6 | 70.4 | % | ||||||||||||
Asia /
Pacific
|
4,931.0 | 10.0 | % | 5,312.0 | 10.6 | % | ||||||||||||
Europe
|
2,917.6 | 5.9 | % | 3,283.3 | 6.5 | % | ||||||||||||
Canada
|
2,493.5 | 5.1 | % | 2,612.6 | 5.2 | % | ||||||||||||
Latin
America
|
1,356.1 | 2.7 | % | 1,508.3 | 3.0 | % | ||||||||||||
All other
countries
|
2,318.8 | 4.7 | % | 2,169.3 | 4.3 | % | ||||||||||||
Total
|
$ | 49,335.1 | 100.0 | % | $ | 50,381.1 | 100.0 | % |
September 30, 2016
|
December 31, 2015
|
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Northeast
|
$ | 8,461.1 | 19.9 | % | $ | 8,169.4 | 18.8 | % | ||||||||||
West
|
7,373.9 | 17.3 | % | 7,454.2 | 17.1 | % | ||||||||||||
Southwest
|
4,604.4 | 10.8 | % | 4,669.1 | 10.7 | % | ||||||||||||
Midwest
|
4,167.7 | 9.8 | % | 4,193.5 | 9.7 | % | ||||||||||||
Southeast
|
3,926.6 | 9.2 | % | 4,117.4 | 9.5 | % | ||||||||||||
Total
U.S.
|
28,533.7 | 67.0 | % | 28,603.6 | 65.8 | % | ||||||||||||
Asia /
Pacific
|
4,931.0 | 11.6 | % | 5,311.2 | 12.2 | % | ||||||||||||
Europe
|
2,917.6 | 6.9 | % | 3,278.5 | 7.5 | % | ||||||||||||
Canada
|
2,493.5 | 5.9 | % | 2,604.3 | 6.0 | % | ||||||||||||
Latin
America
|
1,356.1 | 3.2 | % | 1,507.9 | 3.5 | % | ||||||||||||
All other
countries
|
2,318.8 | 5.4 | % | 2,167.1 | 5.0 | % | ||||||||||||
Total
|
$ | 42,550.7 | 100.0 | % | $ | 43,472.6 | 100.0 | % |
September 30, 2016
|
December 31, 2015
|
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
State
|
||||||||||||||||||
California
|
$ | 5,378.1 | 12.6 | % | $ | 5,309.2 | 12.2 | % | ||||||||||
Texas
|
3,866.0 | 9.1 | % | 3,989.9 | 9.2 | % | ||||||||||||
New
York
|
2,969.5 | 7.0 | % | 2,870.7 | 6.6 | % | ||||||||||||
All other
states
|
16,320.1 | 38.3 | % | 16,433.8 | 37.8 | % | ||||||||||||
Total
U.S.
|
$ | 28,533.7 | 67.0 | % | $ | 28,603.6 | 65.8 | % | ||||||||||
Country
|
||||||||||||||||||
Canada
|
$ | 2,493.5 | 5.9 | % | $ | 2,604.3 | 6.0 | % | ||||||||||
China
|
963.5 | 2.3 | % | 982.6 | 2.3 | % | ||||||||||||
Australia
|
761.2 | 1.8 | % | 842.9 | 1.9 | % | ||||||||||||
Mexico
|
649.1 | 1.5 | % | 676.0 | 1.6 | % | ||||||||||||
Marshall
Islands
|
645.0 | 1.5 | % | 882.0 | 2.0 | % | ||||||||||||
Spain
|
547.7 | 1.3 | % | 560.1 | 1.3 | % | ||||||||||||
U.K.
|
501.0 | 1.2 | % | 949.8 | 2.2 | % | ||||||||||||
Philippines
|
470.7 | 1.1 | % | 485.7 | 1.1 | % | ||||||||||||
All other
countries
|
6,985.3 | 16.4 | % | 6,885.6 | 15.8 | % | ||||||||||||
Total
International
|
$ | 14,017.0 | 33.0 | % | $ | 14,869.0 | 34.2 | % |
September 30, 2016
|
December 31, 2015
|
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Commercial
airlines (including regional airlines)
(1)
|
$ | 10,627.4 | 25.0 | % | $ | 10,728.3 | 24.7 | % | ||||||||||
Real
Estate
|
4,963.6 | 11.7 | % | 4,895.4 | 11.3 | % | ||||||||||||
Transportation
(3)
|
4,730.7 | 11.1 | % | 4,586.5 | 10.5 | % | ||||||||||||
Manufacturing
(2)
|
4,653.8 | 10.9 | % | 4,951.3 | 11.4 | % | ||||||||||||
Service
industries
|
3,250.5 | 7.6 | % | 3,441.2 | 7.9 | % | ||||||||||||
Retail
(4)
|
2,507.3 | 5.9 | % | 2,513.4 | 5.8 | % | ||||||||||||
Energy and
utilities
|
2,442.7 | 5.7 | % | 2,091.5 | 4.8 | % | ||||||||||||
Wholesale
|
2,134.8 | 5.0 | % | 2,310.5 | 5.3 | % | ||||||||||||
Oil and gas
extraction / services
|
1,621.1 | 3.8 | % | 1,871.0 | 4.3 | % | ||||||||||||
Healthcare
|
1,391.9 | 3.3 | % | 1,223.4 | 2.8 | % | ||||||||||||
Finance and
insurance
|
1,005.3 | 2.4 | % | 1,128.2 | 2.6 | % | ||||||||||||
Other (no
industry greater than 2%)
|
3,221.6 | 7.6 | % | 3,731.9 | 8.6 | % | ||||||||||||
Total
|
$ | 42,550.7 | 100.0 | % | $ | 43,472.6 | 100.0 | % |
(1)
|
Includes the Commercial Air Portfolio and additional financing and leasing assets that are not commercial aircraft. |
(2)
|
At September 30, 2016, manufacturers of chemicals, including pharmaceuticals (2.7%), petroleum and coal, including refining (1.7%), food (1.2%), and stone, clay, glass and concrete (1.0%). |
(3)
|
At September 30, 2016, includes rail (4.7%), maritime (4.1%) and trucking and shipping (1.3%). |
(4)
|
At September 30, 2016 includes retailers of general merchandise (2.2%). |
Commercial
Air Portfolio
(dollars in millions)
September 30, 2016
|
December 31, 2015
|
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net
Investment |
Number
|
Net
Investment |
Number
|
|||||||||||||||
By
Product:
|
||||||||||||||||||
Operating
lease
(1)
|
$ | 9,611.5 | 283 | $ | 9,772.2 | 284 | ||||||||||||
Loan
|
607.9 | 44 | 664.5 | 57 | ||||||||||||||
Capital
lease
|
403.3 | 22 | 320.4 | 21 | ||||||||||||||
Total
|
$ | 10,622.7 | 349 | $ | 10,757.1 | 362 |
Commercial
Air Operating Lease Portfolio
(dollars in millions)
(1)
September 30, 2016
|
December 31, 2015
|
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net
Investment |
Number
|
Net
Investment |
Number
|
|||||||||||||||
By
Region:
|
||||||||||||||||||
Asia /
Pacific
|
$ | 3,844.5 | 94 | $ | 3,704.2 | 88 | ||||||||||||
U.S. and
Canada
|
2,044.9 | 64 | 2,091.0 | 65 | ||||||||||||||
Europe
|
2,044.3 | 76 | 2,195.4 | 80 | ||||||||||||||
Latin
America
|
1,055.9 | 35 | 1,152.6 | 38 | ||||||||||||||
Africa /
Middle East
|
621.9 | 14 | 629.0 | 13 | ||||||||||||||
Total
|
$ | 9,611.5 | 283 | $ | 9,772.2 | 284 | ||||||||||||
By
Manufacturer:
|
||||||||||||||||||
Airbus
|
$ | 6,105.0 | 159 | $ | 6,232.3 | 161 | ||||||||||||
Boeing
|
2,927.0 | 102 | 2,929.6 | 101 | ||||||||||||||
Embraer
|
532.0 | 21 | 552.7 | 21 | ||||||||||||||
Other
|
47.5 | 1 | 57.6 | 1 | ||||||||||||||
Total
|
$ | 9,611.5 | 283 | $ | 9,772.2 | 284 | ||||||||||||
By Body
Type
(2)
:
|
||||||||||||||||||
Narrow
body
|
$ | 6,167.5 | 230 | $ | 6,211.4 | 230 | ||||||||||||
Intermediate
|
3,395.6 | 51 | 3,502.2 | 52 | ||||||||||||||
Regional and
other
|
48.4 | 2 | 58.6 | 2 | ||||||||||||||
Total
|
$ | 9,611.5 | 283 | $ | 9,772.2 | 284 | ||||||||||||
Number of
customers
|
99 | 95 | ||||||||||||||||
Weighted average
age of fleet (years)
|
6 | 5 |
(1)
|
Includes operating lease equipment held for sale. |
(2)
|
Narrow body are single aisle design and consist primarily of Boeing 737 and 757 series and Airbus A320 series aircraft. Intermediate body are smaller twin aisle design and consist primarily of Boeing 767 series and Airbus A330 series aircraft. Regional and other include engines and Bombardier CRJ-900. |
Consumer
Financing and Leasing Assets
(dollars in millions)
September 30, 2016
|
December 31, 2015
|
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net
Investment |
% of Total
|
Net
Investment |
% of Total
|
|||||||||||||||
Single family
residential
|
$ | 5,626.9 | 82.9 | % | $ | 5,657.6 | 81.9 | % | ||||||||||
Reverse
mortgage
|
901.6 | 13.3 | % | 917.4 | 13.3 | % | ||||||||||||
Home Equity
Lines of Credit
|
254.2 | 3.8 | % | 325.7 | 4.7 | % | ||||||||||||
Other
consumer
|
1.7 | 0.0 | % | 7.8 | 0.1 | % | ||||||||||||
Total
loans
|
$ | 6,784.4 | 100.0 | % | $ | 6,908.5 | 100.0 | % |
September 30, 2016
|
December 31, 2015
|
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net
Investment |
% of Total
|
Net
Investment |
% of Total
|
|||||||||||||||
California
|
$ | 4,309.0 | 63.5 | % | $ | 4,236.5 | 61.3 | % | ||||||||||
New
York
|
534.4 | 7.9 | % | 560.5 | 8.1 | % | ||||||||||||
Florida
|
291.7 | 4.3 | % | 306.7 | 4.5 | % | ||||||||||||
New
Jersey
|
161.6 | 2.4 | % | 177.8 | 2.6 | % | ||||||||||||
Maryland
|
139.0 | 2.0 | % | 154.4 | 2.2 | % | ||||||||||||
Other States and
Territories
(1)
|
1,348.7 | 19.9 | % | 1,472.6 | 21.3 | % | ||||||||||||
|
$ | 6,784.4 | 100.0 | % | $ | 6,908.5 | 100.0 | % |
(1)
|
No state or territory has a total in excess of 2%. |
OTHER ASSETS AND OTHER LIABILITIES
September 30,
2016 |
December 31,
2015 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Current and
deferred federal and state tax assets
|
$ | 1,087.2 | $ | 1,252.5 | ||||||
Deposits on
commercial aerospace equipment
|
934.1 | 696.0 | ||||||||
Tax credit
investments and investments in unconsolidated subsidiaries
|
242.9 | 223.9 | ||||||||
Property,
furniture and fixtures
|
186.1 | 197.2 | ||||||||
Other
counterparty receivables
|
139.9 | 59.0 | ||||||||
Fair value of
derivative financial instruments
|
124.1 | 140.7 | ||||||||
OREO and
repossessed assets
|
88.7 | 127.3 | ||||||||
Tax
receivables, other than income taxes
|
71.0 | 98.2 | ||||||||
Other
(1),(2)
|
445.0 | 502.8 | ||||||||
Total other
assets
|
$ | 3,319.0 | $ | 3,297.6 |
(1)
|
Other includes executive retirement plan and deferred compensation, prepaid expenses, accrued interest and dividends and other miscellaneous assets. |
(2)
|
Other also includes servicing advances. In connection with the OneWest Transaction, the Company acquired the servicing obligations for residential mortgage loans. As of September 30, 2016, the loans serviced for others total $16.0 billion for reverse mortgage loans and $61.8 million for single family residential mortgage loans. |
Other
Liabilities
(dollars in millions)
September 30,
2016 |
December 31,
2015 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Equipment
maintenance reserves
|
$ | 1,076.2 | $ | 1,012.4 | ||||||
Accounts
payable and accrued expenses
|
553.0 | 628.1 | ||||||||
Current taxes
payable and deferred taxes
|
399.5 | 363.1 | ||||||||
Security and
other deposits
|
198.8 | 263.0 | ||||||||
Fair value of
derivative financial instruments
|
154.6 | 103.0 | ||||||||
Accrued
interest payable
|
148.5 | 209.6 | ||||||||
Valuation
adjustment relating to aerospace commitments
|
68.9 | 73.1 | ||||||||
Other
(1)
|
568.8 | 506.4 | ||||||||
Total other
liabilities
|
$ | 3,168.3 | $ | 3,158.7 |
(1)
|
Other consists of liabilities for taxes other than income, contingent liabilities and other miscellaneous liabilities. |
n
|
Strategic risk is the risk of the impact on earnings or capital arising from adverse strategic business decisions, improper implementation of strategic decisions, or lack of responsiveness to changes in the industry, including changes in the financial services industry as well as fundamental changes in the businesses in which our customers and our firm engages. |
n
|
Credit risk is the risk of loss (including the incurrence of additional expenses) when a borrower does not meet its financial obligations to the Company. Credit risk may arise from lending, leasing, and/or counterparty activities. |
n
|
Asset risk is the equipment valuation and residual risk of leased equipment owned by the Company that arises from fluctuations in the supply and demand for the underlying leased equipment. The Company is exposed to the risk that, at the end of the lease term, the value of the asset will be lower than expected, resulting in either reduced future lease income over the remaining life of the asset or a lower sale value. |
n
|
Market risk includes interest rate and foreign currency risk. Interest rate risk is the risk that fluctuations in interest rates will have an impact on the Companys net finance revenue and on the market value of the Companys assets, liabilities and derivatives. Foreign exchange risk is the risk that fluctuations in exchange rates between currencies can have an economic impact on the Companys non-dollar denominated assets and liabilities. |
n
|
Liquidity risk is the risk that the Company has an inability to maintain adequate cash resources and funding capacity to meet its obligations, including under stress scenarios. |
n
|
Operational risk is the risk of financial loss, damage to the Companys reputation, or other adverse impacts resulting from inadequate or failed internal processes and systems, people or external events. |
n
|
Information Technology Risk is the risk of financial loss, damage to the Companys reputation or other adverse impacts resulting from unauthorized (malicious or accidental) disclosure, modification, or destruction of information, including cyber-crime, unintentional errors and omissions, IT disruptions due to natural or man-made disasters, or failure to exercise due care and diligence in the implementation and operation of an IT system. |
n
|
Legal and Regulatory Risk is the risk that the Company is not in compliance with applicable laws and regulations, which may result in fines, regulatory criticism or business restrictions, or damage to the Companys reputation. |
n
|
Reputational Risk is the potential that negative publicity, whether true or not, will cause a decline in the value of the Company due to changes in the customer base, costly litigation, or other revenue reductions. |
n
|
Net Interest Income Sensitivity (NII Sensitivity), which measures the net impact of hypothetical changes in interest rates on forecasted net interest income from specific interest sensitive items assuming a static balance sheet over a twelve month period; and |
n
|
Economic Value of Equity (EVE), which measures the net impact of these hypothetical changes on the value of equity by assessing the economic value of assets, liabilities and derivatives. |
Change to NII Sensitivity and EVE
September 30, 2016
|
June 30, 2016
|
December 31, 2015
|
||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
+100 bps
|
100 bps
|
+100 bps
|
100 bps
|
+100 bps
|
100 bps
|
|||||||||||||||||||||
NII
Sensitivity
|
3.7 | % | (2.1 | )% | 3.9 | % | (2.2 | )% | 3.5 | % | (2.1 | )% | ||||||||||||||
EVE
|
(1.2 | )% | 1.3 | % | (0.2 | )% | 0.0 | % | 0.5 | % | (0.5 | )% |
September 30,
2016 |
December 31,
2015 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Available-for-sale securities
|
||||||||||
Debt
securities
|
$ | 2,729.2 | $ | 2,007.8 | ||||||
Equity
securities
|
34.8 | 14.3 | ||||||||
Held-to-maturity securities
|
||||||||||
Debt
securities
|
254.4 | 300.1 | ||||||||
Securities
carried at fair value with changes recorded in net income
|
||||||||||
Debt
securities
|
301.3 | 339.7 | ||||||||
Non-marketable investments
|
272.7 | 291.9 | ||||||||
Total
investment securities
|
$ | 3,592.4 | $ | 2,953.8 |
n
|
A multi-year committed revolving credit facility with a total commitment of $1.5 billion, of which approximately $1.4 billion was unused at September 30, 2016; and |
n
|
Committed securitization facilities and secured bank lines totaled $3.6 billion, of which $2.3 billion was unused at September 30, 2016, provided that eligible assets are available that can be funded through these facilities. |
September 30,
2016 |
December 31,
2015 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Deposits
|
66 | % | 64 | % | ||||||
Unsecured
|
22 | % | 21 | % | ||||||
Secured
Borrowings:
|
||||||||||
Structured
financings
|
7 | % | 9 | % | ||||||
FHLB
Advances
|
5 | % | 6 | % |
September 30, 2016
|
December 31, 2015
|
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total
|
Percent
of Total |
Total
|
Percent
of Total |
|||||||||||||||
Checking and
Savings:
|
||||||||||||||||||
Non-interest
bearing checking
|
$ | 987.1 | 3.0 | % | $ | 866.2 | 2.6 | % | ||||||||||
Interest
bearing checking
|
3,074.8 | 9.3 | % | 3,123.7 | 9.5 | % | ||||||||||||
Money market
/ Sweeps
(1)
|
6,334.9 | 19.3 | % | 5,560.5 | 17.0 | % | ||||||||||||
Savings
|
4,325.5 | 13.2 | % | 4,840.5 | 14.8 | % | ||||||||||||
Certificates of
Deposits
|
17,975.1 | 54.7 | % | 18,201.9 | 55.5 | % | ||||||||||||
Other
|
156.9 | 0.5 | % | 189.4 | 0.6 | % | ||||||||||||
Total
|
$ | 32,854.3 | 100.0 | % | $ | 32,782.2 | 100.0 | % |
(1)
|
Includes deposit sweep arrangements related to money market and healthcare savings accounts. |
Debt Ratings as of September 30, 2016
S&P
|
Fitch
|
Moodys
|
DBRS
|
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
CIT Group
Inc.
|
|
|
|
|
||||||||||||||
Issuer /
Counterparty Credit Rating
|
BB+
|
BB+
|
Ba3
|
BB (High)
|
||||||||||||||
Revolving Credit
Facility Rating
|
BB+
|
BB+
|
Ba3
|
BBB (Low)
|
||||||||||||||
Series C Notes /
Senior Unsecured Debt Rating
|
BB+
|
BB+
|
Ba3
|
BB (High)
|
||||||||||||||
Outlook
|
Stable
|
Stable
|
Stable
|
Stable
|
||||||||||||||
CIT Bank,
N.A.
|
|
|||||||||||||||||
Deposit Rating
(LT/ST)
|
NR
|
BBB-/F3
|
Baa3/Prime 3
|
BB (High)/R-4
|
||||||||||||||
Long-term Senior
Unsecured Debt Rating
|
BBB-
|
BB+
|
Baa3
|
BB (High)
|
||||||||||||||
Outlook
|
Stable
|
Stable
|
Stable
|
Positive
|
Total
|
2017
|
2018
|
2019
|
2020
|
2021+
|
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Structured
financings
(2)
|
$ | 3,553.9 | $ | 1,000.8 | $ | 571.6 | $ | 401.8 | $ | 328.7 | $ | 1,251.0 | ||||||||||||||
FHLB
advances
|
2,437.5 | 42.0 | 900.0 | 1,495.5 | | | ||||||||||||||||||||
Senior
unsecured
|
10,645.9 | 2,934.5 | 2,160.0 | 2,750.0 | 750.0 | 2,051.4 | ||||||||||||||||||||
Total
Long-term borrowings
|
16,637.3 | 3,977.3 | 3,631.6 | 4,647.3 | 1,078.7 | 3,302.4 | ||||||||||||||||||||
Deposits
|
32,843.6 | 24,003.9 | 2,689.4 | 1,797.8 | 2,150.9 | 2,201.6 | ||||||||||||||||||||
Credit balances
of factoring clients
|
1,228.9 | 1,228.9 | | | | | ||||||||||||||||||||
Lease rental
expense
|
294.9 | 50.8 | 47.2 | 45.9 | 39.4 | 111.6 | ||||||||||||||||||||
Total
contractual payments
|
$ | 51,004.7 | $ | 29,260.9 | $ | 6,368.2 | $ | 6,491.0 | $ | 3,269.0 | $ | 5,615.6 |
(1)
|
Projected payments of debt interest expense and obligations relating to post-retirement programs are excluded. |
(2)
|
Includes non-recourse secured borrowings, which are generally repaid in conjunction with the pledged receivable maturities. |
Commitment
Expiration by Twelve Months Ended September 30
(dollars in millions)
Total
|
2017
|
2018
|
2019
|
2020
|
2021+
|
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Financing
commitments
|
$ | 6,743.2 | $ | 1,417.1 | $ | 855.1 | $ | 1,393.0 | $ | 1,249.9 | $ | 1,828.1 | ||||||||||||||
Aerospace
purchase commitments
(1)
|
8,937.3 | 591.2 | 1,608.5 | 2,552.2 | 3,429.4 | 756.0 | ||||||||||||||||||||
Rail and other
purchase commitments
|
423.7 | 395.9 | 27.8 | | | | ||||||||||||||||||||
Letters of
credit
|
241.3 | 43.4 | 29.7 | 65.6 | 24.6 | 78.0 | ||||||||||||||||||||
Deferred
purchase agreements
|
2,076.5 | 2,076.5 | | | | | ||||||||||||||||||||
Guarantees,
acceptances and other recourse obligations
|
2.4 | 2.4 | | | | | ||||||||||||||||||||
Liabilities for
unrecognized tax obligations
(2)
|
38.0 | 5.0 | 33.0 | | | | ||||||||||||||||||||
Total
contractual commitments
|
$ | 18,462.4 | $ | 4,531.5 | $ | 2,554.1 | $ | 4,010.8 | $ | 4,703.9 | $ | 2,662.1 |
(1)
|
Aerospace commitments are net of amounts on deposit with manufacturers. |
(2)
|
The balance cannot be estimated past 2018; therefore the remaining balance is reflected in 2018. |
Declaration Date
|
Payment Date
|
Per Share
Dividend |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
January
|
February 26,
2016
|
$ | 0.15 | |||||||
April
|
May 27,
2016
|
$ | 0.15 | |||||||
July
|
August 26,
2016
|
$ | 0.15 | |||||||
October
|
November 25,
2016
|
$ | 0.15 |
Tier
1 Capital and Total Capital Components
(dollars in millions)
September 30, 2016
|
December 31, 2015
|
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Transition
Basis |
Fully
Phased-in Basis |
Transition
Basis |
Fully
Phased-in Basis |
|||||||||||||||
Tier 1
Capital
|
||||||||||||||||||
Total common
stockholders equity
|
$ | 11,237.0 | $ | 11,237.0 | $ | 10,978.1 | $ | 10,978.1 | ||||||||||
Effect of
certain items in accumulated other comprehensive loss excluded from Tier 1 Capital and qualifying noncontrolling interests
|
55.3 | 55.3 | 76.9 | 76.9 | ||||||||||||||
Adjusted total
equity
|
11,292.3 | 11,292.3 | 11,055.0 | 11,055.0 | ||||||||||||||
Less:
Goodwill
(1)
|
(1,099.8 | ) | (1,099.8 | ) | (1,130.8 | ) | (1,130.8 | ) | ||||||||||
Disallowed
deferred tax assets
|
(804.4 | ) | (804.4 | ) | (904.5 | ) | (904.5 | ) | ||||||||||
Disallowed
intangible assets
(1)
|
(71.3 | ) | (118.8 | ) | (53.6 | ) | (134.0 | ) | ||||||||||
Other Tier 1
components
|
(5.8 | ) | (17.9 | ) | (0.1 | ) | (0.1 | ) | ||||||||||
CET 1
Capital
|
9,311.0 | 9,251.4 | 8,966.0 | 8,885.6 | ||||||||||||||
Tier 1
Capital
|
9,311.0 | 9,251.4 | 8,966.0 | 8,885.6 | ||||||||||||||
Tier 2
Capital
|
||||||||||||||||||
Qualifying
reserve for credit losses and other reserves
(2)
|
469.3 | 469.3 | 403.3 | 403.3 | ||||||||||||||
Total
qualifying capital
|
$ | 9,780.3 | $ | 9,720.7 | $ | 9,369.3 | $ | 9,288.9 | ||||||||||
Risk-weighted
assets
|
$ | 66,802.2 | $ | 67,504.1 | $ | 69,563.6 | $ | 70,239.3 | ||||||||||
BHC
Ratios
|
||||||||||||||||||
CET 1 Capital
Ratio
|
13.9 | % | 13.7 | % | 12.9 | % | 12.7 | % | ||||||||||
Tier 1 Capital
Ratio
|
13.9 | % | 13.7 | % | 12.9 | % | 12.7 | % | ||||||||||
Total Capital
Ratio
|
14.6 | % | 14.4 | % | 13.5 | % | 13.2 | % | ||||||||||
Tier 1 Leverage
Ratio
|
14.4 | % | 14.3 | % | 13.5 | % | 13.4 | % | ||||||||||
CIT Bank,
N.A. Ratios
|
||||||||||||||||||
CET 1 Capital
Ratio
|
13.1 | % | 13.0 | % | 12.8 | % | 12.6 | % | ||||||||||
Tier 1 Capital
Ratio
|
13.1 | % | 13.0 | % | 12.8 | % | 12.6 | % | ||||||||||
Total Capital
Ratio
|
14.4 | % | 14.2 | % | 13.9 | % | 13.6 | % | ||||||||||
Tier 1 Leverage
Ratio
|
10.9 | % | 10.7 | % | 10.9 | % | 10.7 | % |
(1)
|
Goodwill and disallowed intangible assets adjustments include the respective portion of deferred tax liability in accordance with guidelines under Basel III. |
(2)
|
Other reserves represents additional credit loss reserves for unfunded lending commitments, letters of credit, and deferred purchase agreements, all of which are recorded in Other Liabilities. |
Risk-Weighted Assets
(dollars in millions)
September 30,
2016 |
December 31,
2015 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Balance sheet
assets
|
$ | 65,965.5 | $ | 67,401.5 | ||||||
Risk weighting
adjustments to balance sheet assets
|
(13,753.1 | ) | (13,728.1 | ) | ||||||
Off balance
sheet items
|
14,589.8 | 15,890.2 | ||||||||
Risk-weighted
assets
|
$ | 66,802.2 | $ | 69,563.6 |
Tangible
Book Value and per Share Amounts
(dollars in millions, except per share amounts)
September 30,
2016 |
December 31,
2015 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Total common
stockholders equity
|
$ | 11,237.0 | $ | 10,978.1 | ||||||
Less:
Goodwill
|
(1,170.5 | ) | (1,198.3 | ) | ||||||
Intangible
assets
|
(161.3 | ) | (176.3 | ) | ||||||
Tangible book
value
|
$ | 9,905.2 | $ | 9,603.5 | ||||||
Book value per
share
|
$ | 55.62 | $ | 54.61 | ||||||
Tangible book
value per share
|
$ | 49.02 | $ | 47.77 |
(1)
|
Tangible book value and tangible book value per share are non-GAAP measures. |
September 30,
2016 |
December 31,
2015 |
||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
ASSETS:
|
|||||||||||
Cash and
deposits with banks
|
$ | 5,491.4 | $ | 6,073.5 | |||||||
Investment
securities
|
3,132.6 | 2,577.4 | |||||||||
Assets held for
sale
|
1,038.8 | 444.2 | |||||||||
Loans
|
27,561.6 | 29,349.8 | |||||||||
Allowance for
loan losses
|
(399.7 | ) | (337.5 | ) | |||||||
Operating lease
equipment, net
|
3,412.9 | 2,777.8 | |||||||||
Indemnification
Assets
|
362.2 | 414.8 | |||||||||
Goodwill
|
810.3 | 830.8 | |||||||||
Intangible
assets
|
150.3 | 163.2 | |||||||||
Other
assets
|
936.8 | 1,006.1 | |||||||||
Assets of
discontinued operations
|
452.9 | 500.5 | |||||||||
Total
Assets
|
$ | 42,950.1 | $ | 43,800.6 | |||||||
LIABILITIES
AND EQUITY:
|
|||||||||||
Deposits
|
$ | 32,854.3 | $ | 32,782.2 | |||||||
FHLB
advances
|
2,438.2 | 3,117.6 | |||||||||
Borrowings
|
355.5 | 798.3 | |||||||||
Other
liabilities
|
839.2 | 799.9 | |||||||||
Liabilities of
discontinued operations
|
927.8 | 696.2 | |||||||||
Total
Liabilities
|
37,415.0 | 38,194.2 | |||||||||
Total
Equity
|
5,535.1 | 5,606.4 | |||||||||
Total
Liabilities and Equity
|
$ | 42,950.1 | $ | 43,800.6 | |||||||
Capital Ratios*
|
|||||||||||
Common Equity
Tier 1 Capital
|
13.0 | % | 12.6 | % | |||||||
Tier 1 Capital
Ratio
|
13.0 | % | 12.6 | % | |||||||
Total Capital
Ratio
|
14.3 | % | 13.6 | % | |||||||
Tier 1
Leverage ratio
|
10.7 | % | 10.7 | % |
Financing
and Leasing Assets by Segment
(dollars in millions)
September 30,
2016 |
December 31,
2015 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Commercial
Banking
|
||||||||||
Commercial
Finance
|
$ | 8,552.5 | $ | 9,381.1 | ||||||
Commercial
Real Estate
|
5,413.9 | 5,357.6 | ||||||||
Business
Capital
|
5,002.2 | 4,692.1 | ||||||||
Total
|
18,968.6 | 19,430.8 | ||||||||
Transportation Finance
|
||||||||||
Aerospace
|
1,216.8 | 2,007.7 | ||||||||
Rail
|
3,095.8 | 2,209.7 | ||||||||
Maritime
|
1,561.1 | 1,678.1 | ||||||||
Total
|
5,873.7 | 5,895.5 | ||||||||
Consumer and
Community
|
||||||||||
Legacy
Consumer Mortgages
|
5,040.8 | 5,471.6 | ||||||||
Other Consumer
Banking
|
2,130.2 | 1,773.9 | ||||||||
Total
|
7,171.0 | 7,245.5 | ||||||||
Total Financing
and Leasing Assets
|
$ | 32,013.3 | $ | 32,571.8 |
Condensed
Statements of Operations
(dollars in millions)
Quarters Ended
|
Nine Months Ended
|
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
||||||||||||||||||
Interest
income
|
$ | 442.2 | $ | 442.7 | $ | 366.7 | $ | 1,331.1 | $ | 767.5 | ||||||||||||
Interest
expense
|
(110.7 | ) | (110.6 | ) | (95.6 | ) | (332.1 | ) | (246.6 | ) | ||||||||||||
Net interest
revenue
|
331.5 | 332.1 | 271.1 | 999.0 | 520.9 | |||||||||||||||||
Provision for
credit losses
|
(42.4 | ) | (31.5 | ) | (44.3 | ) | (166.4 | ) | (98.3 | ) | ||||||||||||
Net interest
revenue, after credit provision
|
289.1 | 300.6 | 226.8 | 832.6 | 422.6 | |||||||||||||||||
Rental income
on operating leases
|
101.4 | 94.3 | 76.0 | 287.9 | 215.2 | |||||||||||||||||
Other
income
|
116.2 | 80.9 | 33.4 | 241.3 | 85.9 | |||||||||||||||||
Total net
revenue, net of interest expense and credit provision
|
506.7 | 475.8 | 336.2 | 1,361.8 | 723.7 | |||||||||||||||||
Operating
expenses
|
(257.3 | ) | (267.7 | ) | (184.1 | ) | (770.9 | ) | (401.6 | ) | ||||||||||||
Depreciation on
operating lease equipment
|
(42.6 | ) | (38.9 | ) | (31.4 | ) | (118.2 | ) | (89.1 | ) | ||||||||||||
Maintenance and
other operating lease expenses
|
(3.8 | ) | (9.9 | ) | (2.5 | ) | (16.3 | ) | (5.0 | ) | ||||||||||||
Loss on debt
extinguishment and deposit redemption
|
(4.9 | ) | (2.4 | ) | | (7.3 | ) | | ||||||||||||||
Income before
provision for income taxes
|
198.1 | 156.9 | 118.2 | 449.1 | 228.0 | |||||||||||||||||
Provision for
income taxes
|
(70.4 | ) | (58.7 | ) | (40.2 | ) | (159.5 | ) | (77.3 | ) | ||||||||||||
Income from
continuing operations
|
127.7 | 98.2 | 78.0 | 289.6 | 150.7 | |||||||||||||||||
Loss on
discontinued operations
|
(15.6 | ) | (166.9 | ) | (3.7 | ) | (187.4 | ) | (3.7 | ) | ||||||||||||
Net (loss)
income
|
$ | 112.1 | $ | (68.7 | ) | $ | 74.3 | $ | 102.2 | $ | 147.0 | |||||||||||
New business
volume funded
|
$ | 2,403.9 | $ | 2,484.0 | $ | 2,535.0 | $ | 6,871.5 | $ | 5,980.9 |
Net
Finance Revenue
(dollars in millions)
Quarters Ended
|
Nine Months Ended
|
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
||||||||||||||||||
Interest
income
|
$ | 442.2 | $ | 442.7 | $ | 366.7 | $ | 1,331.1 | $ | 767.5 | ||||||||||||
Rental income
on operating leases
|
101.4 | 94.3 | 76.0 | 287.9 | 215.2 | |||||||||||||||||
Finance
revenue
|
543.6 | 537.0 | 442.7 | 1,619.0 | 982.7 | |||||||||||||||||
Interest
expense
|
(110.7 | ) | (110.6 | ) | (95.6 | ) | (332.1 | ) | (246.6 | ) | ||||||||||||
Depreciation on
operating lease equipment
|
(42.6 | ) | (38.9 | ) | (31.4 | ) | (118.2 | ) | (89.1 | ) | ||||||||||||
Maintenance and
other operating lease expenses
|
(3.8 | ) | (9.9 | ) | (2.5 | ) | (16.3 | ) | (5.0 | ) | ||||||||||||
Net finance
revenue (NFR)
|
$ | 386.5 | $ | 377.6 | $ | 313.2 | $ | 1,152.4 | $ | 642.0 | ||||||||||||
Average Earning
Assets (AEA)*
|
$ | 41,088.7 | $ | 41,340.6 | $ | 34,125.0 | $ | 41,326.6 | $ | 25,600.9 | ||||||||||||
As a % of
AEA:
|
||||||||||||||||||||||
Interest
income
|
4.30 | % | 4.29 | % | 4.30 | % | 4.29 | % | 4.00 | % | ||||||||||||
Rental income
on operating leases
|
0.99 | % | 0.91 | % | 0.89 | % | 0.93 | % | 1.12 | % | ||||||||||||
Finance
revenue
|
5.29 | % | 5.20 | % | 5.19 | % | 5.22 | % | 5.12 | % | ||||||||||||
Interest
expense
|
(1.08 | )% | (1.07 | )% | (1.12 | )% | (1.07 | )% | (1.29 | )% | ||||||||||||
Depreciation on
operating lease equipment
|
(0.41 | )% | (0.38 | )% | (0.37 | )% | (0.38 | )% | (0.46 | )% | ||||||||||||
Maintenance and
other operating lease expenses
|
(0.04 | )% | (0.10 | )% | (0.03 | )% | (0.05 | )% | (0.03 | )% | ||||||||||||
Net finance
margin (NFM)
|
3.76 | % | 3.65 | % | 3.67 | % | 3.72 | % | 3.34 | % |
n
|
Allowance for Loan Losses |
n
|
Loan Impairment |
n
|
Fair Value Determination |
n
|
Lease Residual Values |
n
|
Liabilities for Uncertain Tax Positions |
n
|
Realizability of Deferred Tax Assets |
n
|
Goodwill Assets |
n
|
Contingent Liabilities |
SELECT DATA AND AVERAGE BALANCE SHEETS
At or for the Quarters Ended
|
Nine Months Ended
|
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
|||||||||||||||||||
Select Statement of Operations Data
|
|||||||||||||||||||||||
Net interest
revenue
|
$ | 210.7 | $ | 212.8 | $ | 157.4 | $ | 632.5 | $ | 185.7 | |||||||||||||
Provision for
credit losses
|
(46.2 | ) | (28.1 | ) | (49.9 | ) | (173.6 | ) | (102.9 | ) | |||||||||||||
Total
non-interest income
|
637.5 | 673.6 | 578.5 | 1,987.4 | 1,790.7 | ||||||||||||||||||
Total
non-interest expenses
|
(576.6 | ) | (582.9 | ) | (549.2 | ) | (1,741.1 | ) | (1,436.0 | ) | |||||||||||||
Income from
continuing operations, net of tax
|
148.4 | 181.1 | 696.8 | 481.2 | 915.8 | ||||||||||||||||||
Loss from
discontinued operation, net of tax
|
(15.6 | ) | (167.0 | ) | | (187.4 | ) | (3.7 | ) | ||||||||||||||
Net
income
|
132.8 | 14.1 | 693.1 | 293.8 | 912.1 | ||||||||||||||||||
Per Common Share Data
|
|||||||||||||||||||||||
Diluted income
per common share continuing operations
|
$ | 0.73 | $ | 0.90 | $ | 3.63 | $ | 2.38 | $ | 5.05 | |||||||||||||
Diluted income
per common share
|
$ | 0.65 | $ | 0.07 | $ | 3.61 | $ | 1.45 | $ | 5.03 | |||||||||||||
Book value per
common share
|
$ | 55.62 | $ | 55.07 | $ | 53.74 | |||||||||||||||||
Tangible book
value per common share
|
$ | 49.02 | $ | 48.45 | $ | 47.09 | |||||||||||||||||
Dividends
declared per common share
|
$ | 0.15 | $ | 0.15 | $ | 0.15 | $ | 0.45 | $ | 0.45 | |||||||||||||
Dividend
payout ratio
|
23.1 | % | 214.3 | % | 4.2 | % | 31.0 | % | 8.9 | % | |||||||||||||
Performance Ratios
|
|||||||||||||||||||||||
Return on
average common stockholders equity
|
4.74 | % | 0.50 | % | 27.54 | % | 3.51 | % | 13.20 | % | |||||||||||||
Return on
tangible common equity
|
6.01 | % | 7.37 | % | 31.00 | % | 6.54 | % | 14.50 | % | |||||||||||||
Adjusted
return on tangible common equity
|
7.45 | % | 8.27 | % | 2.57 | % | 7.58 | % | 4.62 | % | |||||||||||||
Net finance
revenue as a percentage of average earning assets
|
3.63 | % | 3.65 | % | 3.67 | % | 3.67 | % | 3.43 | % | |||||||||||||
Return on
average earning assets
|
1.01 | % | 1.22 | % | 5.31 | % | 1.09 | % | 2.70 | % | |||||||||||||
Return on
average continuing operations total assets
|
0.90 | % | 1.09 | % | 4.66 | % | 0.97 | % | 2.39 | % | |||||||||||||
Balance Sheet Data
|
|||||||||||||||||||||||
Loans
including receivables pledged
|
$ | 29,918.2 | $ | 30,456.8 | $ | 32,406.2 | |||||||||||||||||
Allowance for
loan losses
|
(421.7 | ) | (399.4 | ) | (335.0 | ) | |||||||||||||||||
Operating
lease equipment, net
|
16,954.8 | 16,864.6 | 15,538.2 | ||||||||||||||||||||
Goodwill
|
1,170.5 | 1,169.7 | 1,135.1 | ||||||||||||||||||||
Total cash and
deposits
|
7,433.6 | 8,103.9 | 8,259.9 | ||||||||||||||||||||
Investment
securities
|
3,592.4 | 3,229.1 | 3,618.8 | ||||||||||||||||||||
Assets of
discontinued operation
|
452.9 | 469.1 | 513.8 | ||||||||||||||||||||
Total
assets
|
65,965.5 | 66,700.3 | 68,019.0 | ||||||||||||||||||||
Deposits
|
32,854.3 | 32,879.1 | 32,328.9 | ||||||||||||||||||||
Borrowings
|
16,548.7 | 17,510.1 | 19,214.0 | ||||||||||||||||||||
Liabilities of
discontinued operation
|
927.8 | 917.1 | 671.9 | ||||||||||||||||||||
Total common
stockholders equity
|
11,237.0 | 11,124.1 | 10,798.7 | ||||||||||||||||||||
Credit Quality
|
|||||||||||||||||||||||
Non-accrual
loans as a percentage of finance receivables
|
0.96 | % | 0.93 | % | 0.66 | % | |||||||||||||||||
Net
charge-offs as a percentage of average finance receivables
|
0.31 | % | 0.53 | % | 0.86 | % | 0.50 | % | 0.63 | % | |||||||||||||
Allowance for
loan losses as a percentage of finance receivables
|
1.41 | % | 1.31 | % | 1.03 | % | |||||||||||||||||
Capital Ratios
|
|||||||||||||||||||||||
Total ending
equity to total ending assets
|
17.0 | % | 16.7 | % | 15.9 | % | |||||||||||||||||
Common Equity
Tier 1 Capital Ratio (fully phased-in)
|
13.7 | % | 13.4 | % | 12.5 | % | |||||||||||||||||
Total Capital
Ratio (fully phased-in)
|
14.4 | % | 14.1 | % | 13.0 | % |
Quarters Ended
|
|||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016
|
June 30, 2016
|
September 30, 2015
|
|||||||||||||||||||||||||||||||||||||
Average
Balance |
Revenue /
Expense |
Average
Rate (%) |
Average
Balance |
Revenue /
Expense |
Average
Rate (%) |
Average
Balance |
Revenue /
Expense |
Average
Rate (%) |
|||||||||||||||||||||||||||||||
Interest
bearing deposits
|
$ | 6,916.0 | $ | 9.5 | 0.55 | % | $ | 7,113.5 | $ | 8.9 | 0.50 | % | $ | 5,812.4 | $ | 4.5 | 0.31 | % | |||||||||||||||||||||
Securities
purchased under agreements to resell
|
| | | | | | 387.5 | 0.6 | 0.62 | % | |||||||||||||||||||||||||||||
Investment
securities
|
3,411.1 | 23.0 | 2.70 | % | 3,130.6 | 22.8 | 2.91 | % | 2,663.2 | 18.4 | 2.76 | % | |||||||||||||||||||||||||||
Loans
(including held for sale)
(2),(3)
|
|||||||||||||||||||||||||||||||||||||||
U.S.
(2)
|
31,386.7 | 436.4 | 5.79 | % | 31,784.4 | 447.8 | 5.87 | % | 27,320.5 | 370.0 | 5.72 | % | |||||||||||||||||||||||||||
Non-U.S.
|
1,122.7 | 25.4 | 9.05 | % | 1,160.2 | 24.4 | 8.41 | % | 1,971.6 | 43.9 | 8.91 | % | |||||||||||||||||||||||||||
Total
loans
(2)
|
32,509.4 | 461.8 | 5.91 | % | 32,944.6 | 472.2 | 5.96 | % | 29,292.1 | 413.9 | 5.95 | % | |||||||||||||||||||||||||||
Total interest
earning assets / interest income
(2),(3)
|
42,836.5 | 494.3 | 4.75 | % | 43,188.7 | 503.9 | 4.81 | % | 38,155.2 | 437.4 | 4.77 | % | |||||||||||||||||||||||||||
Operating lease
equipment, net (including held for sale)
(4)
|
|||||||||||||||||||||||||||||||||||||||
U.S.
(4)
|
9,010.1 | 164.7 | 7.31 | % | 8,922.0 | 168.9 | 7.57 | % | 8,114.8 | 177.5 | 8.75 | % | |||||||||||||||||||||||||||
Non-U.S.
(4)
|
8,026.5 | 159.4 | 7.94 | % | 8,003.5 | 159.1 | 7.95 | % | 7,330.3 | 146.8 | 8.01 | % | |||||||||||||||||||||||||||
Total operating
lease equipment, net
(4)
|
17,036.6 | 324.1 | 7.61 | % | 16,925.5 | 328.0 | 7.75 | % | 15,445.1 | 324.3 | 8.40 | % | |||||||||||||||||||||||||||
Indemnification
assets
|
366.3 | (4.2 | ) | (4.59 | )% | 379.8 | (8.6 | ) | (9.06 | )% | 305.6 | 0.3 | 0.39 | % | |||||||||||||||||||||||||
Total earning
assets
(2)
|
60,239.4 | $ | 814.2 | 5.52 | % | 60,494.0 | $ | 823.3 | 5.56 | % | 53,905.9 | $ | 762.0 | 5.81 | % | ||||||||||||||||||||||||
Non
interest earning assets
|
|||||||||||||||||||||||||||||||||||||||
Cash due from
banks
|
952.0 | 1,051.4 | 1,902.6 | ||||||||||||||||||||||||||||||||||||
Allowance for
loan losses
|
(404.4 | ) | (398.9 | ) | (347.9 | ) | |||||||||||||||||||||||||||||||||
All other
non-interest earning assets
|
5,270.4 | 5,278.8 | 4,323.5 | ||||||||||||||||||||||||||||||||||||
Assets of
discontinued operation
|
461.0 | 479.9 | 333.8 | ||||||||||||||||||||||||||||||||||||
Total
Average Assets
|
$ | 66,518.4 | $ | 66,905.2 | $ | 60,117.9 | |||||||||||||||||||||||||||||||||
Average
Liabilities
|
|||||||||||||||||||||||||||||||||||||||
Borrowings
|
|||||||||||||||||||||||||||||||||||||||
Deposits
|
$ | 31,732.9 | $ | 99.4 | 1.25 | % | $ | 31,643.5 | $ | 99.4 | 1.26 | % | $ | 26,220.3 | $ | 89.7 | 1.37 | % | |||||||||||||||||||||
Borrowings
|
17,117.2 | 180.0 | 4.21 | % | 17,853.7 | 183.1 | 4.10 | % | 18,148.4 | 190.6 | 4.20 | % | |||||||||||||||||||||||||||
Total
interest-bearing liabilities
|
48,850.1 | 279.4 | 2.29 | % | 49,497.2 | 282.5 | 2.28 | % | 44,368.7 | 280.3 | 2.53 | % | |||||||||||||||||||||||||||
Non-interest
bearing deposits
|
1,197.4 | 1,124.9 | 739.8 | ||||||||||||||||||||||||||||||||||||
Credit balances
of factoring clients
|
1,234.1 | 1,264.9 | 1,457.8 | ||||||||||||||||||||||||||||||||||||
Other
non-interest bearing liabilities
|
3,109.7 | 3,093.3 | 3,054.0 | ||||||||||||||||||||||||||||||||||||
Liabilities of
discontinued operation
|
916.1 | 738.1 | 432.0 | ||||||||||||||||||||||||||||||||||||
Noncontrolling
interests
|
0.5 | 0.5 | 0.5 | ||||||||||||||||||||||||||||||||||||
Stockholders equity
|
11,210.5 | 11,186.3 | 10,065.1 | ||||||||||||||||||||||||||||||||||||
Total
Average Liabilities and Stockholders Equity
|
$ | 66,518.4 | $ | 66,905.2 | $ | 60,117.9 | |||||||||||||||||||||||||||||||||
Net revenue
spread
|
3.23 | % | 3.28 | % | 3.28 | % | |||||||||||||||||||||||||||||||||
Impact of
non-interest bearing sources
|
0.40 | % | 0.37 | % | 0.39 | % | |||||||||||||||||||||||||||||||||
Net
revenue/yield on earning assets
(2)
|
$ | 534.8 | 3.63 | % | $ | 540.8 | 3.65 | % | $ | 481.7 | 3.67 | % |
Nine Months Ended
|
||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2016
|
September 30, 2015
|
|||||||||||||||||||||||||
Average
Balance |
Revenue /
Expense |
Average
Rate (%) |
Average
Balance |
Revenue /
Expense |
Average
Rate (%) |
|||||||||||||||||||||
Interest
bearing deposits
|
$ | 7,035.6 | $ | 26.7 | 0.51 | % | $ | 5,499.0 | $ | 11.9 | 0.29 | % | ||||||||||||||
Securities
purchased under agreements to resell
|
| | | 535.0 | 2.3 | 0.57 | % | |||||||||||||||||||
Investment
securities
|
3,173.5 | 68.4 | 2.87 | % | 1,911.3 | 26.9 | 1.88 | % | ||||||||||||||||||
Loans
(including held for sale)
(2),(3)
|
||||||||||||||||||||||||||
U.S.
(2)
|
31,714.4 | 1,325.4 | 5.81 | % | 21,133.6 | 816.1 | 5.53 | % | ||||||||||||||||||
Non-U.S.
|
1,199.3 | 76.2 | 8.47 | % | 2,118.3 | 145.0 | 9.13 | % | ||||||||||||||||||
Total
loans
(2)
|
32,913.7 | 1,401.6 | 5.91 | % | 23,251.9 | 961.1 | 5.88 | % | ||||||||||||||||||
Total interest
earning assets / interest income
(2),(3)
|
43,122.8 | 1,496.7 | 4.77 | % | 31,197.2 | 1,002.2 | 4.50 | % | ||||||||||||||||||
Operating lease
equipment, net (including held for sale)
(4)
|
||||||||||||||||||||||||||
U.S.
(4)
|
8,919.5 | 519.2 | 7.76 | % | 7,923.0 | 530.7 | 8.93 | % | ||||||||||||||||||
Non-U.S.
(4)
|
7,970.3 | 476.8 | 7.98 | % | 7,386.9 | 445.8 | 8.05 | % | ||||||||||||||||||
Total operating
lease equipment, net
(4)
|
16,889.8 | 996.0 | 7.86 | % | 15,309.9 | 976.5 | 8.50 | % | ||||||||||||||||||
Indemnification
assets
|
382.6 | (15.9 | ) | (5.54 | )% | 103.0 | 0.3 | 0.39 | % | |||||||||||||||||
Total earning
assets
(2)
|
60,395.2 | $ | 2,476.8 | 5.59 | % | 46,610.1 | $ | 1,979.0 | 5.85 | % | ||||||||||||||||
Non interest
earning assets
|
||||||||||||||||||||||||||
Cash due from
banks
|
1,131.1 | 1,282.5 | ||||||||||||||||||||||||
Allowance for
loan losses
|
(389.5 | ) | (350.4 | ) | ||||||||||||||||||||||
All other
non-interest earning assets
|
5,292.9 | 3,608.2 | ||||||||||||||||||||||||
Assets of
discontinued operation
|
478.5 | 112.5 | ||||||||||||||||||||||||
Total
Average Assets
|
$ | 66,908.2 | $ | 51,262.9 | ||||||||||||||||||||||
Average
Liabilities
|
||||||||||||||||||||||||||
Borrowings
|
||||||||||||||||||||||||||
Deposits
|
$ | 31,725.2 | $ | 298.3 | 1.25 | % | $ | 19,799.1 | $ | 230.9 | 1.55 | % | ||||||||||||||
Borrowings
|
17,720.2 | 550.0 | 4.14 | % | 17,409.8 | 585.9 | 4.49 | % | ||||||||||||||||||
Total
interest-bearing liabilities
|
49,445.4 | 848.3 | 2.29 | % | 37,208.9 | 816.8 | 2.93 | % | ||||||||||||||||||
Non-interest
bearing deposits
|
1,140.8 | 315.6 | ||||||||||||||||||||||||
Credit balances
of factoring clients
|
1,277.0 | 1,467.2 | ||||||||||||||||||||||||
Other
non-interest bearing liabilities
|
3,099.3 | 2,916.4 | ||||||||||||||||||||||||
Liabilities of
discontinued operation
|
777.6 | 145.6 | ||||||||||||||||||||||||
Noncontrolling
interests
|
0.5 | (1.3 | ) | |||||||||||||||||||||||
Stockholders equity
|
11,167.6 | 9,210.5 | ||||||||||||||||||||||||
Total
Average Liabilities and Stockholders Equity
|
$ | 66,908.2 | $ | 51,262.9 | ||||||||||||||||||||||
Net revenue
spread
|
3.30 | % | 2.92 | % | ||||||||||||||||||||||
Impact of
non-interest bearing sources
|
0.37 | % | 0.51 | % | ||||||||||||||||||||||
Net
revenue/yield on earning assets
(2)
|
$ | 1,628.5 | 3.67 | % | $ | 1,162.2 | 3.43 | % |
(1)
|
Average rates are impacted by PAA accretion and amortization. |
(2)
|
The balance and rate presented is calculated net of average credit balances for factoring clients. |
(3)
|
Non-accrual loans and related income are included in the respective categories. |
(4)
|
Operating lease rental income is a significant source of revenue; therefore we have presented the rental revenues net of depreciation and net of maintenance and other operating lease expenses. |
Quarters Ended
|
Nine Months Ended
|
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
||||||||||||||||||
Total Net
Revenue
|
||||||||||||||||||||||
Interest
income
|
$ | 490.1 | $ | 495.3 | $ | 437.7 | $ | 1,480.8 | $ | 1,002.5 | ||||||||||||
Rental income
on operating leases
|
563.6 | 569.3 | 539.3 | 1,708.3 | 1,601.6 | |||||||||||||||||
Finance
revenue
|
1,053.7 | 1,064.6 | 977.0 | 3,189.1 | 2,604.1 | |||||||||||||||||
Interest
expense
|
(279.4 | ) | (282.5 | ) | (280.3 | ) | (848.3 | ) | (816.8 | ) | ||||||||||||
Depreciation
on operating lease equipment
|
(179.1 | ) | (176.4 | ) | (159.1 | ) | (530.8 | ) | (473.7 | ) | ||||||||||||
Maintenance
and other operating lease expenses
|
(60.4 | ) | (64.9 | ) | (55.9 | ) | (181.5 | ) | (151.4 | ) | ||||||||||||
Net finance
revenue
|
534.8 | 540.8 | 481.7 | 1,628.5 | 1,162.2 | |||||||||||||||||
Other
income
|
73.9 | 104.3 | 39.2 | 279.1 | 189.1 | |||||||||||||||||
Total net
revenue
|
$ | 608.7 | $ | 645.1 | $ | 520.9 | $ | 1,907.6 | $ | 1,351.3 | ||||||||||||
NFR as a %
of AEA
|
3.63 | % | 3.65 | % | 3.67 | % | 3.67 | % | 3.43 | % | ||||||||||||
Net
Operating Lease Revenue
|
||||||||||||||||||||||
Rental income
on operating leases
|
$ | 563.6 | $ | 569.3 | $ | 539.3 | $ | 1,708.3 | $ | 1,601.6 | ||||||||||||
Depreciation
on operating lease equipment
|
(179.1 | ) | (176.4 | ) | (159.1 | ) | (530.8 | ) | (473.7 | ) | ||||||||||||
Maintenance
and other operating lease expenses
|
(60.4 | ) | (64.9 | ) | (55.9 | ) | (181.5 | ) | (151.4 | ) | ||||||||||||
Net
operating lease revenue
|
$ | 324.1 | $ | 328.0 | $ | 324.3 | $ | 996.0 | $ | 976.5 |
Quarters Ended
|
Nine Months Ended
|
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
||||||||||||||||||
Operating
expenses
|
$ | 332.0 | $ | 337.5 | $ | 333.9 | $ | 1,018.0 | $ | 810.5 | ||||||||||||
Intangible
asset amortization
|
(6.4 | ) | (6.4 | ) | (5.0 | ) | (19.2 | ) | (6.1 | ) | ||||||||||||
Provision for
severance and facilities exiting activities
|
(2.3 | ) | (9.7 | ) | (5.1 | ) | (32.3 | ) | (5.2 | ) | ||||||||||||
Operating
expenses excluding restructuring costs and intangible asset amortization
|
$ | 323.3 | $ | 321.4 | $ | 323.8 | $ | 966.5 | $ | 799.2 | ||||||||||||
Operating
expenses as a % of AEA
|
2.25 | % | 2.28 | % | 2.55 | % | 2.30 | % | 2.39 | % | ||||||||||||
Operating
expenses excluding restructuring costs and intangible amortization
(3)
|
2.19 | % | 2.17 | % | 2.47 | % | 2.18 | % | 2.36 | % | ||||||||||||
Total Net
Revenue
|
$ | 608.7 | $ | 645.1 | $ | 520.9 | $ | 1,907.6 | $ | 1,351.3 | ||||||||||||
Net Efficiency
Ratio
(4)
|
53.1 | % | 49.8 | % | 62.2 | % | 50.7 | % | 59.1 | % |
September 30,
2016 |
June 30,
2016 |
December 31,
2015 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Loans
|
$ | 29,918.2 | $ | 30,456.8 | $ | 31,671.7 | ||||||||
Operating lease
equipment, net
|
16,954.8 | 16,864.6 | 16,617.0 | |||||||||||
Interest
bearing cash
|
6,513.1 | 7,082.8 | 6,820.3 | |||||||||||
Investment
securities
|
3,592.4 | 3,229.1 | 2,953.8 | |||||||||||
Assets held for
sale
|
2,462.1 | 2,403.3 | 2,092.4 | |||||||||||
Indemnification
assets
|
362.2 | 375.5 | 414.8 | |||||||||||
Credit balances
of factoring clients
|
(1,228.9 | ) | (1,215.2 | ) | (1,344.0 | ) | ||||||||
Total earning
assets
|
$ | 58,573.9 | $ | 59,196.9 | $ | 59,226.0 | ||||||||
Average
Earning Assets (for the respective quarters)
|
$ | 59,005.4 | $ | 59,229.2 | $ | 59,141.5 |
Quarters Ended
|
Nine Months Ended
|
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
|||||||||||||||||||
Total common
stockholders equity
|
$ | 11,237.0 | $ | 11,124.1 | $ | 10,798.7 | $ | 11,237.0 | $ | 10,798.7 | |||||||||||||
Less:
Goodwill
|
(1,170.5 | ) | (1,169.7 | ) | (1,135.1 | ) | (1,170.5 | ) | (1,135.1 | ) | |||||||||||||
Intangible
assets
|
(161.3 | ) | (168.9 | ) | (201.3 | ) | (161.3 | ) | (201.3 | ) | |||||||||||||
Tangible book
value
|
9,905.2 | 9,785.5 | 9,462.3 | 9,905.2 | 9,462.3 | ||||||||||||||||||
Less:
disallowed deferred tax asset
|
(804.5 | ) | (842.4 | ) | (867.4 | ) | (804.5 | ) | (867.4 | ) | |||||||||||||
Adjusted
tangible common equity
(7)
|
$ | 9,100.7 | $ | 8,943.1 | $ | 8,594.9 | $ | 9,100.7 | $ | 8,594.9 | |||||||||||||
Income from
continuing operations
|
$ | 148.4 | $ | 181.1 | $ | 696.8 | $ | 481.2 | $ | 915.8 | |||||||||||||
Adjustments:
intangible assets amortization, net of tax
|
4.6 | 4.3 | 3.8 | 13.3 | 4.5 | ||||||||||||||||||
Valuation
reversal
|
15.7 | | (646.8 | ) | 15.7 | (646.8 | ) | ||||||||||||||||
Adjusted net
income
|
$ | 168.7 | $ | 185.4 | $ | 53.8 | $ | 510.2 | $ | 273.5 | |||||||||||||
Average
tangible common equity
|
$ | 9,875.3 | $ | 9,829.7 | $ | 8,990.9 | $ | 9,813.1 | $ | 8,420.9 | |||||||||||||
Less: average
disallowed deferred tax asset
|
(823.4 | ) | (858.2 | ) | (603.5 | ) | (840.3 | ) | (521.8 | ) | |||||||||||||
Average
adjusted tangible common equity
|
$ | 9,051.9 | $ | 8,971.5 | $ | 8,387.4 | $ | 8,972.8 | $ | 7,899.1 | |||||||||||||
Adjusted
return on tangible common equity
(7)
|
7.45 | % | 8.27 | % | 2.57 | % | 7.58 | % | 4.62 | % |
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total
assets
|
$ | 65,965.5 | $ | 66,700.3 | $ | 68,019.0 | ||||||||
Assets of
discontinued operation
|
(452.9 | ) | (469.1 | ) | (513.8 | ) | ||||||||
Continuing
operations total assets
|
$ | 65,512.6 | $ | 66,231.2 | $ | 67,505.2 |
Quarters Ended
|
Nine Months Ended
|
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
||||||||||||||||||
Provision
(benefit) for income taxes
|
$ | 77.0 | $ | 94.3 | $ | (560.0 | ) | $ | 224.0 | $ | (478.2 | ) | ||||||||||
Discrete
items
|
(15.6 | ) | (3.9 | ) | 592.6 | (8.4 | ) | 597.8 | ||||||||||||||
Provision for
income taxes, before discrete items
|
$ | 61.4 | $ | 90.4 | $ | 32.6 | $ | 215.6 | $ | 119.6 | ||||||||||||
Income from
continuing operations before provision for income taxes
|
$ | 225.4 | $ | 275.4 | $ | 136.8 | $ | 705.2 | $ | 437.5 | ||||||||||||
Effective tax
rate
|
34.2 | % | 34.2 | % | (409.4 | )% | 31.8 | % | (109.3 | )% | ||||||||||||
Effective tax
rate, before discrete items
|
27.2 | % | 32.8 | % | 23.8 | % | 30.6 | % | 27.3 | % |
(1)
|
Total net revenues is a non-GAAP measure that represents the combination of net finance revenue and other income and is an aggregation of all sources of revenue for the Company. Total net revenues is used by management to monitor business performance. Given our asset composition includes a high level of operating lease equipment, net finance revenue as a percent of AEA is a more appropriate metric than net interest margin (NIM) (a common metric used by other bank holding companies), as NIM does not fully reflect the earnings of our portfolio because it includes the impact of debt costs of all our assets but excludes the net revenue (rental revenue less depreciation and maintenance and other operating lease expenses) from operating leases. |
(2)
|
Net operating lease revenue is a non-GAAP measure that represents the combination of rental income on operating leases less depreciation on operating lease equipment and maintenance and other operating lease expenses. Net operating lease revenues is used by management to monitor portfolio performance. |
(3)
|
Operating expenses excluding restructuring costs and intangible asset amortization is a non-GAAP measure used by management to compare period over period expenses. |
(4)
|
Net efficiency ratio is a non-GAAP measurement used by management to measure operating expenses (before restructuring costs and intangible amortization) to total net revenues. The efficiency ratio is used to compare how much revenue is being generated to how much is being spent in a given time period. |
(5)
|
Earning assets is a non-GAAP measure and are utilized in certain revenue and earnings ratios. Earning assets are net of credit balances of factoring clients. |
(6)
|
Tangible book value is a non-GAAP measure, which represents an adjusted common shareholders equity balance that has been reduced by goodwill and intangible assets. Tangible book value is used to compute a per common share amount, which is used to evaluate our use of equity. |
(7)
|
Return on average tangible common equity is adjusted to remove the impact of intangible amortization, goodwill impairment and the impact from valuation allowance reversals from income from continuing operations, while the average tangible common equity is reduced for disallowed deferred tax assets. Return on average tangible common equity is another metric used to evaluate our use of equity. |
(8)
|
Continuing operations total assets is a non-GAAP measure, which management uses for analytical purposes to compare balance sheet assets on a consistent basis. |
(9)
|
The provision for income before discrete items and the respective effective tax rate are non-GAAP measures, which management uses for analytical purposes to understand the Companys tax rate on a more consistent basis. |
n
|
our liquidity risk and capital management, including our capital plan, leverage, capital ratios, and credit ratings, our liquidity plan, and our plans and the potential transactions designed to enhance our liquidity and capital, and for a return of capital, |
n
|
our plans to change our funding mix and to access new sources of funding to broaden our use of deposit taking capabilities, |
n
|
our pending or potential acquisition and disposition plans, and the integration and restructuring risks inherent in such acquisitions, including our August 2015 acquisition of OneWest Bank and our pending sale of the Commercial Air leasing business, |
n
|
our credit risk management and credit quality, |
n
|
our asset/liability risk management, |
n
|
our funding, borrowing costs and net finance revenue, |
n
|
our operational risks, including risk of operational errors, failure of operational controls, success of systems enhancements and expansion of risk management and control functions, |
n
|
our mix of portfolio asset classes, including changes resulting from growth initiatives, new business initiatives, new products, acquisitions and divestitures, new business and customer retention, |
n
|
legal risks, including related to the enforceability of our agreements and to changes in laws and regulations, |
n
|
our growth rates, |
n
|
our commitments to extend credit or purchase equipment, and |
n
|
how we may be affected by legal proceedings. |
n
|
capital markets liquidity, |
n
|
risks of and/or actual economic slowdown, downturn or recession, |
n
|
industry cycles and trends, |
n
|
uncertainties associated with risk management, including credit, prepayment, asset/liability, interest rate and currency risks, |
n
|
adequacy of reserves for credit losses, |
n
|
risks inherent in changes in market interest rates and quality spreads, |
n
|
funding opportunities, deposit taking capabilities and borrowing costs, |
n
|
conditions and/or changes in funding markets and our access to such markets, including the secured and unsecured debt and asset-backed securitization markets, |
n
|
risks of implementing new processes, procedures, and systems, including any new processes, procedures, and systems required to comply with the additional laws and regulations applicable to systematically important financial institutions, |
n
|
risks associated with the value and recoverability of leased equipment and related lease residual values, |
n
|
risks of failing to achieve the projected revenue growth from new business initiatives or the projected expense reductions from efficiency improvements, |
n
|
application of fair value accounting in volatile markets, |
n
|
application of goodwill accounting in a recessionary economy, |
n
|
changes in laws or regulations governing our business and operations, or affecting our assets, including our operating lease equipment, |
n
|
changes in competitive factors, |
n
|
demographic trends, |
n
|
customer retention rates, |
n
|
risks associated with dispositions of businesses or asset portfolios, including how to replace the income associated with such businesses or asset portfolios and the risk of residual liabilities from such businesses or portfolios, |
n
|
risks associated with acquisitions of businesses or asset portfolios and the risks of integrating such acquisitions, including the integration of OneWest Bank, and |
n
|
regulatory changes and/or developments. |
1)
|
Implement a data quality control program. |
2)
|
Enhance controls over documentation of detailed data sources. |
3)
|
Simplify the reserve estimation process and improve governance, controls and documentation. |
Unregistered Sales of Equity Securities and Use of Proceeds |
(a)
|
Exhibits |
2.1
|
Agreement and Plan of Merger, by and among CIT Group Inc., IMB HoldCo LLC, Carbon Merger Sub LLC and JCF III HoldCo I L.P., dated as of July
21, 2014 (incorporated by reference to Exhibit 2.1 to Form 8-K filed July 25, 2014).
|
|||
2.2
|
Amendment No. 1, dated as of July 21, 2015, to the Agreement and Plan of Merger, by and among CIT Group Inc., IMB HoldCo I L.P., Carbon Merger
Sub LLC and JCF III HoldCo I L.P., dated as of July 21, 2014 (incorporated by reference to Exhibit 2.1 to Form 8-K filed July 27,
2015).
|
|||
3.1
|
Fourth Restated Certificate of Incorporation of the Company, as filed with the Office of the Secretary of State of the State of Delaware on
May 17, 2016 (incorporated by reference to Exhibit 3.1 to Form 8-K filed May 17, 2016).
|
|||
3.2
|
Amended and Restated By-laws of the Company, as amended through May 10, 2016 (incorporated by reference to Exhibit 3.2 to Form 8-K filed May
17, 2016).
|
|||
4.1
|
Indenture dated as of January 20, 2006 between CIT Group Inc. and The Bank of New York Mellon (as successor to JPMorgan Chase Bank N.A.) for
the issuance of senior debt securities (incorporated by reference to Exhibit 4.3 to Form S-3 filed January 20, 2006).
|
|||
4.2
|
First
Supplemental Indenture dated as of February 13, 2007 between CIT Group Inc. and The Bank of New York Mellon (as successor to JPMorgan Chase Bank N.A.)
for the issuance of senior debt securities (incorporated by reference to Exhibit 4.1 to Form 8-K filed on February 13, 2007).
|
|||
4.3
|
Third
Supplemental Indenture dated as of October 1, 2009, between CIT Group Inc. and The Bank of New York Mellon (as successor to JPMorgan Chase Bank N.A.)
relating to senior debt securities (incorporated by reference to Exhibit 4.4 to Form 8-K filed on October 7, 2009).
|
|||
4.4
|
Fourth Supplemental Indenture dated as of October 16, 2009 between CIT Group Inc. and The Bank of New York Mellon (as successor to JPMorgan
Chase Bank N.A.) relating to senior debt securities (incorporated by reference to Exhibit 4.1 to Form 8-K filed October 19, 2009).
|
|||
4.5
|
Framework Agreement, dated July 11, 2008, among ABN AMRO Bank N.V., as arranger, Madeleine Leasing Limited, as initial borrower, CIT Aerospace
International, as initial head lessee, and CIT Group Inc., as guarantor, as amended by the Deed of Amendment, dated July 19, 2010, among The Royal Bank
of Scotland N.V. (f/k/a ABN AMRO Bank N.V.), as arranger, Madeleine Leasing Limited, as initial borrower, CIT Aerospace International, as initial head
lessee, and CIT Group Inc., as guarantor, as supplemented by Letter Agreement No. 1 of 2010, dated July 19, 2010, among The Royal Bank of Scotland
N.V., as arranger, CIT Aerospace International, as head lessee, and CIT Group Inc., as guarantor, as amended and supplemented by the Accession Deed,
dated July 21, 2010, among The Royal Bank of Scotland N.V., as arranger, Madeleine Leasing Limited, as original borrower, and Jessica Leasing Limited,
as acceding party, as supplemented by Letter Agreement No. 2 of 2010, dated July 29, 2010, among The Royal Bank of Scotland N.V., as arranger, CIT
Aerospace International, as head lessee, and CIT Group Inc., as guarantor, relating to certain Export Credit Agency sponsored secured financings of
aircraft and related assets (incorporated by reference to Exhibit 4.11 to Form 10-K filed March 10, 2011).
|
|||
4.6
|
Form
of All Parties Agreement among CIT Aerospace International, as head lessee, Madeleine Leasing Limited, as borrower and lessor, CIT Group Inc., as
guarantor, various financial institutions, as original ECA lenders, ABN AMRO Bank N.V., Paris Branch, as French national agent, ABN AMRO Bank N.V.,
Niederlassung Deutschland, as German national agent, ABN AMRO Bank N.V., London Branch, as British national agent, ABN AMRO Bank N.V., London Branch,
as ECA facility agent, ABN AMRO Bank N.V., London Branch, as security trustee, and CIT Aerospace International, as servicing agent, relating to certain
Export Credit Agency sponsored secured financings of aircraft and related assets during the 2008 and 2009 fiscal years (incorporated by reference to
Exhibit 4.12 to Form 10-K filed March 10, 2011).
|
4.7
|
Form
of ECA Loan Agreement among Madeleine Leasing Limited, as borrower, various financial institutions, as original ECA lenders, ABN AMRO Bank N.V., Paris
Branch, as French national agent, ABN AMRO Bank N.V., Niederlassung Deutschland, as German national agent, ABN AMRO Bank N.V., London Branch, as
British national agent, ABN AMRO Bank N.V., London Branch, as ECA facility agent, ABN AMRO Bank N.V., London Branch, as security trustee, and CIT
Aerospace International, as servicing agent, relating to certain Export Credit Agency sponsored secured financings of aircraft and related assets
during the 2008 and 2009 fiscal years (incorporated by reference to Exhibit 4.13 to Form 10-K filed March 10, 2011).
|
|||
4.8
|
Form
of Aircraft Head Lease between Madeleine Leasing Limited, as lessor, and CIT Aerospace International, as head lessee, relating to certain Export Credit
Agency sponsored secured financings of aircraft and related assets during the 2008 and 2009 fiscal years (incorporated by reference to Exhibit 4.14 to
Form 10-K filed March 10, 2011).
|
|||
4.9
|
Form
of Proceeds and Intercreditor Deed among Madeleine Leasing Limited, as borrower and lessor, various financial institutions, ABN AMRO Bank N.V., Paris
Branch, as French national agent, ABN AMRO Bank N.V., Niederlassung Deutschland, as German national agent, ABN AMRO Bank N.V., London Branch, as
British national agent, ABN AMRO Bank N.V., London Branch, as ECA facility agent, ABN AMRO Bank N.V., London Branch, as security trustee, relating to
certain Export Credit Agency sponsored secured financings of aircraft and related assets during the 2008 and 2009 fiscal years (incorporated by
reference to Exhibit 4.15 to Form 10-K filed March 10, 2011).
|
|||
4.10
|
Form
of All Parties Agreement among CIT Aerospace International, as head lessee, Jessica Leasing Limited, as borrower and lessor, CIT Group Inc., as
guarantor, various financial institutions, as original ECA lenders, Citibank International plc, as French national agent, Citibank International plc,
as German national agent, Citibank International plc, as British national agent, The Royal Bank of Scotland N.V., London Branch, as ECA facility agent,
The Royal Bank of Scotland N.V., London Branch, as security trustee, CIT Aerospace International, as servicing agent, and Citibank, N.A., as
administrative agent, relating to certain Export Credit Agency sponsored secured financings of aircraft and related assets during the 2010 fiscal year
(incorporated by reference to Exhibit 4.16 to Form 10-K filed March 10, 2011).
|
|||
4.11
|
Form
of ECA Loan Agreement among Jessica Leasing Limited, as borrower, various financial institutions, as original ECA lenders, Citibank International plc,
as French national agent, Citibank International plc, as German national agent, Citibank International plc, as British national agent, The Royal Bank
of Scotland N.V., London Branch, as ECA facility agent, The Royal Bank of Scotland N.V., London Branch, as security trustee, and Citibank, N.A., as
administrative agent, relating to certain Export Credit Agency sponsored secured financings of aircraft and related assets during the 2010 fiscal year
(incorporated by reference to Exhibit 4.17 to Form 10-K filed March 10, 2011).
|
|||
4.12
|
Form
of Aircraft Head Lease between Jessica Leasing Limited, as lessor, and CIT Aerospace International, as head lessee, relating to certain Export Credit
Agency sponsored secured financings of aircraft and related assets during the 2010 fiscal year (incorporated by reference to Exhibit 4.18 to Form 10-K
filed March 10, 2011).
|
|||
4.13
|
Form
of Proceeds and Intercreditor Deed among Jessica Leasing Limited, as borrower and lessor, various financial institutions, as original ECA lenders,
Citibank International plc, as French national agent, Citibank International plc, as German national agent, Citibank International plc, as British
national agent, The Royal Bank of Scotland N.V., London Branch, as ECA facility agent, The Royal Bank of Scotland N.V., London Branch, as security
trustee, and Citibank, N.A., as administrative agent, relating to certain Export Credit Agency sponsored secured financings of aircraft and related
assets during the 2010 fiscal year (incorporated by reference to Exhibit 4.19 to Form 10-K filed March 10, 2011).
|
|||
4.14
|
Indenture, dated as of March 30, 2011, between CIT Group Inc. and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference
to Exhibit 4.1 to Form 8-K filed June 30, 2011).
|
|||
4.15
|
First
Supplemental Indenture, dated as of March 30, 2011, between CIT Group Inc., the Guarantors named therein, and Deutsche Bank Trust Company Americas, as
trustee (including the Form of 5.250% Note due 2014 and the Form of 6.625% Note due 2018) (incorporated by reference to Exhibit 4.2 to Form 8-K filed
June 30, 2011).
|
|||
4.16
|
Third
Supplemental Indenture, dated as of February 7, 2012, between CIT Group Inc., the Guarantors named therein, and Deutsche Bank Trust Company Americas,
as trustee (including the Form of Notes) (incorporated by reference to Exhibit 4.4 of Form 8-K dated February 13, 2012).
|
4.17
|
Registration Rights Agreement, dated as of February 7, 2012, among CIT Group Inc., the Guarantors named therein, and JP Morgan Securities LLC,
as representative for the initial purchasers named therein (incorporated by reference to Exhibit 10.1 of Form 8-K dated February 13,
2012).
|
|||
4.18
|
Indenture, dated as of March 15, 2012, among CIT Group Inc., Wilmington Trust, National Association, as trustee, and Deutsche Bank Trust
Company Americas, as paying agent, security registrar and authenticating agent (incorporated by reference to Exhibit 4.1 of Form 8-K filed March 16,
2012).
|
|||
4.19
|
First
Supplemental Indenture, dated as of March 15, 2012, among CIT Group Inc., Wilmington Trust, National Association, as trustee, and Deutsche Bank Trust
Company Americas, as paying agent, security registrar and authenticating agent (including the Form of 5.25% Senior Unsecured Note due 2018)
(incorporated by reference to Exhibit 4.2 of Form 8-K filed March 16, 2012).
|
|||
4.20
|
Second Supplemental Indenture, dated as of May 4, 2012, among CIT Group Inc., Wilmington Trust, National Association, as trustee, and Deutsche
Bank Trust Company Americas, as paying agent, security registrar and authenticating agent (including the Form of 5.000% Senior Unsecured Note due 2017
and the Form of 5.375% Senior Unsecured Note due 2020) (incorporated by reference to Exhibit 4.2 of Form 8-K filed May 4, 2012).
|
|||
4.21
|
Third
Supplemental Indenture, dated as of August 3, 2012, among CIT Group Inc., Wilmington Trust, National Association, as trustee, and Deutsche Bank Trust
Company Americas, as paying agent, security registrar and authenticating agent (including the Form of 4.25% Senior Unsecured Note due 2017 and the Form
of 5.00% Senior Unsecured Note due 2022) (incorporated by reference to Exhibit 4.2 to Form 8-K filed August 3, 2012).
|
|||
4.22
|
Fourth Supplemental Indenture, dated as of August 1, 2013, among CIT Group Inc., Wilmington Trust, National Association, as trustee, and
Deutsche Bank Trust Company Americas, as paying agent, security registrar and authenticating agent (including the Form of 5.00% Senior Unsecured Note
due 2023) (incorporated by reference to Exhibit 4.2 to Form 8-K filed August 1, 2013).
|
|||
4.23
|
Fifth
Supplemental Indenture, dated as of February 19, 2014, among CIT Group Inc., Wilmington Trust, National Association, as trustee, and Deutsche Bank
Trust Company Americas, as paying agent, security registrar and authenticating agent (including the Form of 3.875% Senior Unsecured Note due 2019)
(incorporated by reference to Exhibit 4.2 to Form 8-K filed February 19, 2014).
|
|||
4.24
|
Second Amended and Restated Revolving Credit and Guaranty Agreement, dated as of February 17, 2016, among CIT Group Inc., certain subsidiaries
of CIT Group Inc., as Guarantors, the Lenders party thereto from time to time and Bank of America, N.A., as Administrative Agent and L/C Issuer
(incorporated by reference to Exhibit 10.1 to Form 8-K filed February 18, 2016).
|
|||
10.1*
|
Amended and Restated CIT Group Inc. Long-Term Incentive Plan (as amended and restated effective December 10, 2009) (incorporated by reference
to Exhibit 4.1 to Form S-8 filed January 11, 2010).
|
|||
10.2*
|
CIT
Group Inc. Supplemental Retirement Plan (As Amended and Restated Effective as of January 1, 2008) (incorporated by reference to Exhibit 10.27 to Form
10-Q filed May 12, 2008).
|
|||
10.3*
|
CIT
Group Inc. Supplemental Savings Plan (As Amended and Restated Effective as of January 1, 2008) (incorporated by reference to Exhibit 10.28 to Form 10-Q
filed May 12, 2008).
|
|||
10.4*
|
New
Executive Retirement Plan of CIT Group Inc. (As Amended and Restated as of January 1, 2008) (incorporated by reference to Exhibit 10.29 to Form 10-Q
filed May 12, 2008).
|
|||
10.5*
|
Form
of CIT Group Inc. Long-term Incentive Plan Stock Option Award Agreement (One Year Vesting) (incorporated by reference to Exhibit 10.35 to Form 10-Q
filed August 9, 2010).
|
|||
10.6*
|
Form
of CIT Group Inc. Long-term Incentive Plan Stock Option Award Agreement (Three Year Vesting) (incorporated by reference to Exhibit 10.36 to Form 10-Q
filed August 9, 2010).
|
|||
10.7*
|
Form
of CIT Group Inc. Long-term Incentive Plan Restricted Stock Unit Director Award Agreement (Initial Grant) (incorporated by reference to Exhibit 10.39
to Form 10-Q filed August 9, 2010).
|
|||
10.8*
|
Form
of CIT Group Inc. Long-term Incentive Plan Restricted Stock Unit Director Award Agreement (Annual Grant) (incorporated by reference to Exhibit 10.40 to
Form 10-Q filed August 9, 2010).
|
10.9**
|
Airbus A320 NEO Family Aircraft Purchase Agreement, dated as of July 28, 2011, between Airbus S.A.S. and C.I.T. Leasing Corporation
(incorporated by reference to Exhibit 10.35 of Form 10-Q/A filed February 1, 2012).
|
|||
10.10**
|
Amended and Restated Confirmation, dated June 28, 2012, between CIT TRS Funding B.V. and Goldman Sachs International, and Credit Support Annex
and ISDA Master Agreement and Schedule, each dated October 26, 2011, between CIT TRS Funding B.V. and Goldman Sachs International (incorporated by
reference to Exhibit 10.32 to Form 10-Q filed August 9, 2012).
|
|||
10.11**
|
Third
Amended and Restated Confirmation, dated June 28, 2012, between CIT Financial Ltd. and Goldman Sachs International, and Amended and Restated ISDA
Master Agreement Schedule, dated October 26, 2011 between CIT Financial Ltd. and Goldman Sachs International (incorporated by reference to Exhibit
10.33 to Form 10-Q filed August 9, 2012).
|
|||
10.12**
|
ISDA
Master Agreement and Credit Support Annex, each dated June 6, 2008, between CIT Financial Ltd. and Goldman Sachs International (incorporated by
reference to Exhibit 10.34 to Form 10-Q filed August 11, 2008).
|
|||
10.13*
|
Form
of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.36 to Form 10-K filed March
1, 2013).
|
|||
10.14*
|
Form
of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (Executives with Employment Agreements) (incorporated by reference to
Exhibit 10.37 to Form 10-K filed March 1, 2013).
|
|||
10.15*
|
CIT
Employee Severance Plan (Effective as of November 6, 2013) (incorporated by reference to Exhibit 10.37 in Form 10-Q filed November 6,
2013).
|
|||
10.16
|
Stockholders Agreement, by and among CIT Group Inc. and the parties listed on the signature pages thereto, dated as of July 21, 2014
(incorporated by reference to Exhibit 10.1 to Form 8-K filed July 25, 2014).
|
|||
10.17*
|
Form
of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (with Performance Based Vesting) (2013) (incorporated by reference to
Exhibit 10.30 to Form 10-K filed February 20, 2015).
|
|||
10.18*
|
Form
of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (with Performance Based Vesting) (2013) (Executives with Employment
Agreements) (incorporated by reference to Exhibit 10.31 to Form 10-K filed February 20, 2015).
|
|||
10.19*
|
Form
of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (with Performance Based Vesting) (2014) (incorporated by reference to
Exhibit 10.32 to Form 10-K filed February 20, 2015).
|
|||
10.20*
|
Form
of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (with Performance Based Vesting) (Executives with Employment
Agreements) (2014) (incorporated by reference to Exhibit 10.33 to Form 10-K filed February 20, 2015).
|
|||
10.21*
|
Form
of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (2013) (incorporated by reference to Exhibit 10.30 to Form 10-Q filed
August 5, 2015).
|
|||
10.22*
|
Form
of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (2013) (Executives with Employment Agreements) (incorporated by
reference to Exhibit 10.31 to Form 10-Q filed August 5, 2015).
|
|||
10.23*
|
Form
of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (2014) (Executives with Employment Agreements) (incorporated by
reference to Exhibit 10.32 to Form 10-Q filed August 5, 2015).
|
|||
10.24*
|
Form
of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (2014) (incorporated by reference to Exhibit 10.33 to Form 10-Q filed
August 5, 2015).
|
|||
10.25*
|
Form
of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (2015) (with ROTCE and Credit Provision Performance Measures)
(incorporated by reference to Exhibit 10.34 to Form 10-Q filed August 5, 2015).
|
|||
10.26*
|
Form
of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (2015) (with ROTCE and Credit Provision Performance Measures)
(Executives with Employment Agreements) (incorporated by reference to Exhibit 10.35 to Form 10-Q filed August 5, 2015).
|
|||
10.27*
|
Form
of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (2015) (with Average Earnings per Share and Average Pre-Tax Return on
Assets Performance Measures) (incorporated by reference to Exhibit 10.36 to Form 10-Q filed August 5, 2015).
|
|||
10.28*
|
Form
of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (2015) (with Average Earnings per Share and Average Pre-Tax Return on
Assets Performance Measures) (Executives with Employment Agreements) (incorporated by reference to Exhibit 10.37 to Form 10-Q filed August 5,
2015).
|
10.29*
|
Retention Letter Agreement, dated July 21, 2014, between CIT Group Inc. and Steven T. Mnuchin (incorporated by reference to Exhibit 10.2 to
Form 8-K filed July 25, 2014).
|
|||
10.30*
|
Offer
Letter, dated October 27, 2015, between CIT Group Inc. and Ellen R. Alemany, including Attached Exhibits. (incorporated by reference to Exhibit 10.39
to Form 10-Q filed November 13, 2015).
|
|||
10.31
|
Nomination and Support Agreement dated February 18, 2016 by and between J.C. Flowers & Co. LLC and CIT Group Inc. (incorporated by
reference to Exhibit 99.1 to Form 8-K filed February 22, 2016).
|
|||
10.32*
|
Form
of CIT Group Inc. Long-term Incentive Plan Restricted Stock Unit Award Agreement (with Performance Based Vesting) (2016) (incorporated by reference to
Exhibit 10.37 to Form 10-Q filed May 9, 2016).
|
|||
10.33*
|
Form
of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (with Performance Based Vesting) (Executives with Employment
Agreements) (2016) (incorporated by reference to Exhibit 10.38 to Form 10-Q filed May 9, 2016).
|
|||
10.34*
|
Form
of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (with ROTCE and Credit Provision Performance Measures) (2016)
(incorporated by reference to Exhibit 10.39 to Form 10-Q filed May 9, 2016).
|
|||
10.35*
|
Form
of CIT Group Inc. Long-Term Incentive Plan Performance Share Unit Award Agreement (with ROTCE and Credit Provision Performance Measures) (Executives
with Employment Agreements) (2016) (incorporated by reference to Exhibit 10.40 to Form 10-Q filed May 9, 2016).
|
|||
10.36*
|
Form
of CIT Group Inc. Long-Term Incentive Plan Restricted Stock Unit Award Agreement (with Performance Based Vesting) (2015) (incorporated by reference to
Exhibit 10.36 to Form 10-Q filed August 15, 2016).
|
|||
10.37*
|
Form
of CIT Group Inc. Omnibus Incentive Plan Restricted Stock Unit Director Award Agreement (Stock Settled, One Year or Three Year Vesting) (incorporated
by reference to Exhibit 10.37 to Form 10-Q filed August 15, 2016).
|
|||
10.38*
|
Form
of CIT Group Inc. Omnibus Incentive Plan Restricted Stock Unit Director Award Agreement (Cash and Stock Settled, One Year or Three Year Vesting)
(incorporated by reference to Exhibit 10.38 to Form 10-Q filed August 15, 2016).
|
|||
10.39*
|
Employment Agreement, dated as of July 5, 2016, between CIT Aerospace LLC and C. Jeffrey Knittel (incorporated by reference to Exhibit 10.1 to
Form 8-K filed July 11, 2016).
|
|||
10.40*
|
CIT
Employee Severance Plan (As Amended and Restated Effective January 1, 2017) (filed herein)
|
|||
12.1
|
CIT
Group Inc. and Subsidiaries Computation of Ratio of Earnings to Fixed Charges.
|
|||
31.1
|
Certification of Ellen R. Alemany pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Commission, as promulgated pursuant to
Section 13(a) of the Securities Exchange Act and Section 302 of the Sarbanes-Oxley Act of 2002.
|
|||
31.2
|
Certification of E. Carol Hayles pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Commission, as promulgated pursuant to
Section 13(a) of the Securities Exchange Act and Section 302 of the Sarbanes-Oxley Act of 2002.
|
|||
32.1***
|
Certification of Ellen R. Alemany pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|||
32.2***
|
Certification of E. Carol Hayles pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|||
101.INS
|
XBRL
Instance Document (Includes the following financial information included in the Companys Annual Report on Form 10-Q for the quarter ended
September 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Operations, (ii) the Consolidated
Balance Sheets, (iii) the Consolidated Statements of Changes in Stockholders Equity and Comprehensive Income, (iv) the Consolidated Statements of
Cash Flows, and (v) Notes to Consolidated Financial Statements.)
|
|||
101.SCH
|
XBRL
Taxonomy Extension Schema Document.
|
|||
101.CAL
|
XBRL
Taxonomy Extension Calculation Linkbase Document.
|
|||
101.LAB
|
XBRL
Taxonomy Extension Label Linkbase Document.
|
|||
101.PRE
|
XBRL
Taxonomy Extension Presentation Linkbase Document.
|
|||
101.DEF
|
XBRL
Taxonomy Extension Definition Linkbase Document.
|
*
|
Indicates a management contract or compensatory plan or arrangement. |
**
|
Portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission as part of an application for granting confidential treatment pursuant to the Securities Exchange Act of 1934, as amended. |
***
|
This information is furnished and not filed for purposes of Section 18 of the Securities Exchange Act of 1934 and is not incorporated by reference into any filing under the Securities Act of 1933. |
|
||||||
November 9,
2016
|
CIT
GROUP INC.
|
|||||
|
/s/ E. Carol Hayles
|
|||||
|
E.
Carol Hayles
|
|||||
|
Executive Vice President and Chief Financial Officer
|
|||||
|
/s/ Edward K. Sperling
|
|||||
|
Edward K. Sperling
|
|||||
|
Executive Vice President and Controller
|
CIT EMPLOYEE SEVERANCE PLAN
As Amended and Restated Effective January 1, 2017
TABLE OF CONTENTS
ARTICLE I | INTRODUCTION | 1 |
ARTICLE II | DEFINITIONS AND INTERPRETATIONS | 1 |
ARTICLE III | ELIGIBILITY TO PARTICIPATE | 6 |
ARTICLE IV | BENEFITS PAYABLE FROM THE PLAN | 7 |
ARTICLE V | NOTICE OF TERMINATION | 11 |
ARTICLE VI | HOW AND WHEN SEVERANCE BENEFITS WILL BE PAID | 11 |
ARTICLE VII | MISCELLANEOUS PROVISIONS | 12 |
ARTICLE VIII | WHAT ELSE A PARTICIPANT NEEDS TO KNOW ABOUT THE PLAN | 14 |
i
CIT EMPLOYEE SEVERANCE PLAN
ARTICLE I
INTRODUCTION
Effective January 1, 2017 (defined herein as the “Effective Date”), CIT Group Inc. (“CIT”) hereby amends and restates the CIT Employee Severance Plan, to provide severance and other benefits to certain employees of CIT and its designated affiliated companies (together, the “Company”) who suffer a loss of employment on or after the Effective Date under the terms and conditions set forth herein. The CIT Employee Severance Plan, as amended and restated in this document as of the Effective Date (the “Plan”), replaces and supersedes any and all severance plans, policies and/or practices of the Company and its Affiliates in effect for covered employees prior to the Effective Date (including, without limitation, the CIT Employee Severance Plan document effective November 6, 2013 (the “Prior Plan”)); provided, however, that any employee of CIT or its Affiliates who has been given written notice of termination prior to the Effective Date, or who meets the requirements for a Good Reason Termination prior to the Effective Date, shall not be eligible for benefits under the Plan (as amended and restated in this document), but shall remain subject to the terms and conditions of the Prior Plan; and ( ii) employees of C2 Aviation Capital, Inc. (and/or any of its subsidiaries) shall not be eligible for benefits under the Plan (as amended and restated in this document), but shall remain subject to the terms and conditions of the Prior Plan.
The Plan is intended to fall within the definition of an “employee welfare benefit plan” under Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). No employee or representative of the Company or any of its Affiliates is authorized to modify, add to or subtract from these terms and conditions, except in accordance with the amendment and termination procedures described herein.
ARTICLE II
DEFINITIONS AND INTERPRETATIONS
The following definitions and interpretations of important terms apply to the Plan.
1. Affiliate . Any corporation that is included in a controlled group of corporations (within the meaning of Section 414(b) of the Code) that includes CIT and any trade or business (whether or not incorporated) that is under common control with CIT (within the meaning of Section 414(c) of the Code); provided, however, that in applying Section 1563(a)(1), (2), and (3) of the Code for purposes of determining a controlled group of corporations under Section 414(b) of the Code, the language “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in Section 1563(a)(1), (2) and (3) of the Code, and in applying Section 1.414(c)-2 of the Treasury Regulations, for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Section 414(c) of the Code, “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in Section 1.414(c)-2 of the Treasury Regulations. Notwithstanding the foregoing, (i) no trade or business that CIT or an Affiliate acquires (or acquires an interest in) as a result of a business loan or lease default or related or similar events, and (ii) no entity in which CIT or an Affiliate has an equity
investment, but which is not consolidated on CIT’s financial statements, shall be considered an Affiliate for purposes of the Plan.
2. Agreement and General Release . The confidential separation agreement and general release provided by the Company to an Employee in connection with his or her termination of employment with the Company, which if executed by the Employee (and not timely revoked), will acknowledge his or her termination of employment with the Company and release the Company, Affiliates and all other affiliated parties and individuals from liability for any and all claims. The Agreement and General Release will also, in the complete and sole discretion of the Company, include additional provisions relating to, by way of example and not limitation: non-solicitation of customers, employees and other parties; confidentiality of the Agreement and General Release; confidentiality of Company and Affiliate information; non-disparagement of the Company, Affiliates and all other affiliated parties and individuals; return of Company and Affiliate property; cooperation with litigation; and such other provisions as the Company deems necessary from time to time to protect its interests and those of its Affiliates, including, without limitation, non-competition provisions. By signing the Agreement and General Release, an Employee waives, among other things, all rights he or she may have under federal, state and local statutes and all common law causes of action related to his or her employment and the termination of his or her employment and agrees to comply with the terms of the Agreement and General Release.
3. Base Pay . The Participant’s annualized base salary from the Company at the time of his or her Termination Date (or, if the Participant is paid on an hourly basis, the Participant’s base wages for the 52-week period preceding his or her Termination Date). Base Pay shall exclude all forms of bonuses or awards, commissions or sales-related compensation, non-cash compensation, incentive or deferred compensation (including STI), overtime pay, employer contributions to employee benefit plans and any other additional or special compensation. However, a Participant’s Base Pay will include salary reduction contributions made on a Participant’s behalf to any plan of the Company under Section 125, 132(f) or 401(k) of the Code. For purposes of the Plan, a Week of Base Pay shall be a Participant’s annual Base Pay divided by 52.
4. Cause . Any reason for an employment termination that does not constitute a basis for an Eligible Termination of Employment, including, without limitation, misconduct, performance or performance related reasons, and any act or omission that would preclude the Employee from employment with the Company by virtue of Section 19 of the Federal Deposit Insurance Act.
The determination as to whether an Employee has been terminated for Cause will be made by the Company, in its sole and absolute discretion, and such determination shall be final and binding on all affected Employees and may be relied upon by the Plan Administrator.
If an Employee is terminated from employment and it is subsequently determined that, by virtue of conduct or circumstances, arising either before or after the termination, the Employee or former Employee engaged in conduct that constitutes Cause or that would have constituted Cause, he or she shall be treated as having been terminated for Cause, and the individual will be
2
ineligible for benefits under the Plan. In such circumstances, in the event that Plan benefits have already been paid by the Company, the Company shall be entitled to recover any such benefits.
5. CEO . The chief executive officer of CIT.
6. Change of Control . A Change of Control shall be defined as set forth in the CIT Group Inc. 2016 Omnibus Incentive Plan, as amended from time to time.
7. Change of Control Termination . A Level 1 Employee’s employment with the Company ends for any reason that constitutes an Eligible Termination of Employment within two years after a Change of Control.
8. CIT . CIT Group Inc. and it successors in interest.
9. Claims Administrator . The Benefit Appeals Review Committee of CIT (or any successor committee), or such other person(s) or committee appointed from time to time by the Benefits Appeals Review Committee of CIT to review claims appeals under the Plan.
10. Claims Reviewer . The Senior Vice President of Compensation and Benefits, Human Resources of CIT.
11. Code . The Internal Revenue Code of 1986, as amended.
12. Committee . The Compensation Committee of the Board of Directors of CIT, as it is constituted from time to time, or any successor committee.
13. Company . CIT and any Affiliate, except an Affiliate that is excluded from the Plan by the CEO and that is listed on Appendix A. An Affiliate shall cease to be part of the Company at the time such company ceases to be an Affiliate.
14. Continuous Service . As of the Participant’s Termination Date and as reflected in the Company’s records, the sum total of the Participant’s period of employment in a capacity that qualifies such person as an Employee. Notwithstanding the foregoing, employment prior to a break in service will not be counted towards a Participant’s Continuous Service if (i) it preceded a break in service longer than one year, or (ii) the Participant was paid or provided (and did not repay) severance or termination-related benefits in connection with such employment prior to a break in service. A Year of Continuous Service is a 12-month period of Continuous Service (no credit will be given for partial years).
15. Effective Date . The Effective Date under this amendment and restatement of the CIT Employee Severance Plan is January 1, 2017. (The CIT Employee Severance Plan was initially effective November 6, 2013.)
16. Eligible Termination of Employment . Eligible Termination of Employment shall mean (a) the involuntary termination by the Company of an Employee’s employment relationship as the result of a job elimination, downsizing or restructuring or (b) a Good Reason Termination.
3
17. EMC Member . A member of CIT’s Executive Management Committee, or a successor committee.
18. Employee . Any employee of the Company who (i) is employed within the United States as of his or her Termination Date (or is a United States citizen temporarily on an employment assignment outside of the United States with the reasonable expectation to return to the United States as a continuing employee of the Company), (ii) is regularly scheduled to work at least twenty hours per week, and (iii) is not eligible to either participate in any other severance plan of the Company or any of its Affiliates or receive severance or termination-related benefits pursuant to a written agreement between such individual and the Company or any of its Affiliates. Notwithstanding the preceding sentence, “Employee” also does not include any individual (i) designated or classified by the Company as an independent contractor, or any other form of contingent worker and not as an employee at the time of any determination, (ii) being paid by or through a third party agency, or (iii) designated or classified by the Company as an intern, or a seasonal, temporary, project-based or leased employee, during the period the individual is so paid or designated; any such individual shall not be an Employee even if he or she is later retroactively reclassified as a common-law or other type of employee of the Company during all or any part of such period pursuant to applicable law or otherwise.
19. Good Reason . Good Reason occurs when, without the Employee’s consent:
(i) | An Employee incurs a material diminution of his or her Base Pay (except in the event of a compensation reduction applicable to the Employee and other employees of comparable rank and/or status); or |
(ii) | Either of the following occurs, which shall be applicable to a Level 1 Employee only: (A) for purposes of determining whether the Employee experiences a Change of Control Termination, such Employee incurs a material diminution of his or her duties and responsibilities following a Change of Control, or (B) for purposes of determining whether the Employee experiences an Eligible Termination of Employment, other than a Change of Control Termination, such Employee incurs a material diminution of his or her duties and responsibilities as a result of actions taken pursuant to the provisions of the agreement under which the Change of Control is effected, but before the Change of Control actually occurs (except the foregoing shall in no event apply to a temporary reduction while the Employee is physically or mentally incapacitated or a modification in the duties and/or responsibilities of the Employee and other employees of comparable rank and/or status); or |
(iii) | An Employee is reassigned to a work location that is more than fifty miles from his or her immediately preceding work location and which increases the distance the Employee has to commute to work by more than fifty miles. |
20. Good Reason Termination . The termination by an Employee of his or her employment relationship with the Company for Good Reason; provided, however, that a Good Reason Termination shall not occur unless (a) the Employee has provided the Company written notice specifying in detail the alleged condition of Good Reason within thirty days of the
4
existence of such condition; (b) the Company has failed to cure such alleged condition within ninety days following the Company’s receipt of such written notice; and (c) if the Committee has determined that the Company has failed to cure such alleged condition, the Employee initiates a termination of employment within five days following the end of such ninety-day cure period.
21. Ineligible Termination . A discharge or other termination of employment of an Employee for any of the following reasons:
(i) | the Employee is involuntarily terminated by the Company, with or without prior warning or notice, for Cause; |
(ii) | an Employee’s voluntary resignation (other than a Good Reason Termination), retirement, job abandonment or other voluntary failure to remain continuously employed through his or her designated Termination Date; |
(iii) | an Employee’s death (except as specifically provided herein) or disability (as defined in the Company’s applicable long-term disability plan or policy last in effect prior to the first date the Employee suffered from such disability); |
(iv) | the business or a portion of the business of the Company is (i) sold in whole or in part to an unaffiliated corporation, company or individual, (ii) merged or consolidated with an unaffiliated corporation, company or individual or is part of a similar corporate transaction or (iii) outsourced to another corporation, company or individual, and the Employee is offered employment with the purchaser or surviving business or the corporation, company or individual to which the business is outsourced (whether or not he or she accepts any such position with the purchaser, surviving business or other company or individual) in a position (a) with an annualized base pay in an amount at least equal to the annualized Base Pay that the Employee last received from the Company; and (b) that does not result in a reassignment of the Employee’s work location that is more than fifty miles from the Employee’s immediately preceding work location and which increases the distance the Employee has to commute to work by more than fifty miles. |
22. Level 1 Employee . An EMC Member and an Employee with a grade of 420 or higher (or such other comparable classification as determined by the Company in writing from time to time) and other key Employees as designated by the CEO and approved by the Committee.
23. Level 2 Employee . An Employee with a grade less than 420 (or such other comparable classification as determined by the Company in writing from time to time).
24. Notice Date . The date on which an Employee is notified by the Company of his or her involuntary Eligible Termination of Employment or an Employee notifies the Company of a Good Reason Termination.
5
25. Notice Period . The time between when an Employee is notified in writing that he or she will be incurring an involuntary Eligible Termination of Employment and his or her Termination Date, as determined under Article V, below.
26. Participant . An Employee who meets the requirements for eligibility under the Plan, as set forth in Article III, below. An individual shall cease being a Participant once all severance and other benefits due to such individual under the Plan have been paid with respect to such Participant and no person shall have any further rights under this Plan with respect to such former Participant.
27. Plan Administrator . The Benefits Administrative Committee of CIT (or successor committee), or such other person(s) or committee appointed from time to time by the Benefits Administrative Committee of CIT to administer the Plan.
28. Severance Pay . The amount payable to a Participant under Article IV, below.
29. Severance Period . The number of weeks for which Base Severance is paid to a Participant under Article IV, below.
30. STI . The discretionary annual incentive, including cash and applicable equity or equity-based or other non-cash awards, whether or not deferred, that may be payable to a Participant, but excluding all other forms of incentive awards, such as any long term incentive awards or payments, special awards or bonuses, sign-on or retention awards or bonuses, earn out awards or payments, awards or payments pursuant to any sales plans and/or commission plans, or any similar awards or payments, as determined in the sole discretion of the Company.
31. Termination Date . The date (as designated by the Company with respect to an involuntary termination) on which an Employee experiences an Eligible Termination of Employment with the Company. Notwithstanding the foregoing, with respect to any Employee, the Company reserves the right, in its sole and absolute discretion, to change a previously designated Termination Date.
ARTICLE III
ELIGIBILITY TO PARTICIPATE
An Employee becomes a Participant in the Plan and shall be entitled to Severance Pay and other benefits provided in Article IV and, if applicable, notice of termination provided in Article V, below, only if he or she:
(i) | Either (A) is notified by the Company in writing on or after the Effective Date of his or her involuntary Eligible Termination of Employment, to be effective as of his or her Termination Date, or (B) meets the requirements for a Good Reason Termination after the Effective Date; |
(ii) | Does not incur an Ineligible Termination or does not continue as or become an employee of the Company or an Affiliate; |
(iii) | Experiences an Eligible Termination of Employment; and |
6
(iv) | Timely returns (and does not timely revoke) a signed, dated and notarized original Agreement and General Release. |
An Employee shall become a Participant and payment of benefits under the Plan will be made only after the Agreement and General Release has been signed and the time for the Employee to revoke the Agreement and General Release (as set forth in the Agreement and General Release), if any, has expired without the Employee having revoked that document.
Notwithstanding the foregoing, if an Employee is notified in writing on or after the Effective Date of his or her involuntary Eligible Termination of Employment and dies prior to his or her designated Termination Date, any amounts that would have been paid to the Employee under the Plan will be paid to the appointed administrator, executor or personal representative of the Participant’s estate (based on the Company’s receipt of a death certificate and letters testamentary, as applicable) as soon as practicable following the effective date of an Agreement and General Release timely executed by the appropriate person.
In addition, with respect to an Employee who is on disability or medical leave of absence and would have incurred an Eligible Termination of Employment but for such leave, such person shall become a Participant on (and the Employee’s Termination Date shall be deemed to be) the date on which the Employee is medically cleared to return to employment (based on such evidence that the Plan Administrator requests, in its discretion), provided that the Employee actually presents himself or herself to the Company for work within 10 calendar days of such clearance date (and satisfies all of the other requirements in this Article III).
ARTICLE IV
BENEFITS PAYABLE FROM THE PLAN
Participants shall be entitled to the following Severance Pay and other benefits under either Section A or B below (without duplication), depending on the category of their Eligible Termination of Employment:
A. | Eligible Termination of Employment (other than a Change of Control Termination) |
A Participant who incurs an Eligible Termination of Employment (other than a Change of Control Termination) shall be entitled to receive the following:
1. Base Severance .
Base Severance in an amount determined under the following chart, provided, however, that the maximum Base Severance under the Plan will be 52 Weeks of Base Pay:
7
Grade |
Minimum
Base Severance
(Weeks of Base Pay) |
Additional Weeks of Base Pay per Full Year of Continuous Service |
EMC | 52 Weeks | N/A |
420 | 39 Weeks | 2 Weeks |
418 | 8 Weeks | 2 Weeks |
416 | 6 Weeks | 2 Weeks |
414 | 6 Weeks | 2 Weeks |
Below 414 | 4 Weeks | 2 Weeks |
2. Severance Bonus .
Severance Bonus (if applicable) in an amount determined as follows:
(a) | Level 1 Employees . |
For Level 1 Employees, the Company will pay the Participant an amount equal to his or her Level 1 Applicable Amount (as defined below), multiplied by a fraction, the numerator of which is the number of months employed (with a partial month deemed to be a full month for this purpose) during the period beginning on the later of (i) January 1st of the year in which the Participant’s Notice Date occurs and (ii) the Participant’s most recent date of hire with the Company, and ending on his or her Termination Date, and the denominator of which is 12. For purposes of the prior sentence, the Level 1 Applicable Amount shall be equal to, (i) if the Participant was eligible for an STI for the year immediately preceding his or her Notice Date, the STI granted to such Participant for such preceding year, if any, (or the most recent STI guarantee, if applicable), and (ii) if the Participant was not eligible for an STI for the year immediately preceding his or her Notice Date, the most recent STI guarantee or estimate/target, if applicable.
Notwithstanding the foregoing, if the Level 1 Participant’s Notice Date is on or after January 1 of a year, but prior to the time that the STI, if any, is paid for the year preceding such Notice Date, the Participant will no longer be eligible for an STI for such preceding year. Instead, the numerator described above under this subparagraph (a) above shall be increased by the number of months the Participant was employed in the year preceding such Notice Date. For the avoidance of doubt, this paragraph shall not in any way be interpreted to provide any entitlement to any Employee with respect to the payment of an STI for the year preceding the Notice Date or otherwise.
(b) | Level 2 Employees . |
Level 2 Employees are not eligible for a Severance Bonus under the Plan.
3. Benefits Payment .
Following his or her Termination Date, a Participant (and his or her eligible dependents) may be eligible to elect to continue medical, vision, prescription drug and dental coverage under the Company-sponsored health coverage plans on a self-pay basis in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”). If a Participant is so eligible for COBRA coverage for himself or herself and/or his or her eligible
8
dependents, the Company will pay the Participant an amount equal to the subsidy the Company would have provided towards the cost of the Participant’s medical, vision, prescription drug and/or dental coverage (as applicable) in effect immediately prior to the Participant’s Notice Date had the Participant remained employed with the Company for the Severance Period and continued such coverage for such period.
For example, if the Participant is entitled to 4 Weeks of Base Pay as Base Severance and is eligible for COBRA, he or she will be eligible for a payment equal to 4 weeks of the COBRA subsidy amount (determined based on the coverage in effect as of the Notice Date). Any payment under this paragraph will include an additional gross up payment meant to reasonably cover applicable federal and state income taxes applicable to the COBRA subsidy amount, as determined in the sole discretion of the Company.
All provisions of the Participant’s (and his or her covered eligible dependents’) COBRA coverage will be in accordance with the applicable plan in effect for similarly situated active employees of the Company (including any applicable co-payments, co-insurance, deductibles and other out-of-pocket expenses).
4. Outplacement Benefits .
Participants may be entitled to certain outplacement services as determined by the Company, in its sole and absolute discretion. If a Participant is offered outplacement services, the Company will make arrangements for the provision of such services at an outplacement provider of the Company’s choice, provided, however, that such outplacement services will cease if a Participant obtains subsequent employment.
B. | Change of Control Termination |
A Level 1 Employee who incurs a Change of Control Termination shall be entitled to receive the following, in lieu of the benefits provided under Section A above:
1. EMC Members .
An EMC Member who incurs a Change of Control Termination shall be entitled to receive Base Severance in an amount equal to two times the sum of (i) his or her annual Base Pay, plus (ii) the average of the highest two out of the last three years’ STI awards, or the simple average if the period is less than three years (or, if the Participant was not eligible for an STI during such period, the current year STI guarantee or estimate/target, if applicable). In addition, the EMC Member shall receive (i) a Severance Bonus, as determined above, but, in the case of a Participant who was eligible for an STI award for at least the last two performance years, based on the average of the highest two out of the last three years’ STI awards, (ii) a Benefits Payment, as determined above, but for a maximum of 24 months (notwithstanding any statutory limitations on the length of COBRA coverage), and (iii) outplacement benefits, as determined above.
2. Grade 420
A grade 420 Employee (and any other key Employee designated by the CEO of CIT and approved by the Committee) who incurs a Change of Control Termination shall be entitled to
9
receive Base Severance in an amount equal to the sum of (i) his or her annual Base Pay, plus (ii) the average of the highest two out of the last three years’ STI awards, or the simple average if the period is less than three years (or, if the Participant was not eligible for an STI during such period, the current year STI guarantee or estimate/target, if applicable). In addition, the Participant shall receive (i) a Severance Bonus, as determined above, but, in the case of a Participant who was eligible for an STI award for at least the last two performance years, based on the average of the highest two out of the last three years’ STI awards, and (ii) a Benefits Payment as determined above, but for a maximum of 12 months, and (iii) outplacement benefits, as determined above.
Notwithstanding the foregoing, if a Participant receives benefits provided under Section A after an Eligible Termination of Employment that (i) occurs within two years prior to a Change of Control, and (ii) such Eligible Termination of Employment results from actions taken pursuant to the provisions of the agreement under which the Change of Control is effected, then such Participant will receive, on the Change of Control date, the difference between the Severance Pay paid to the Participant under Section A above and the Severance Pay that would be payable under this Section B as if such Eligible Termination of Employment were a Change of Control Termination.
* * *
If an Employee is eligible to participate in the Plan (whether or not the Employee elects to become a Participant), such Employee shall not be entitled to receive any other severance, separation, notice (other than notice required under the Plan) or termination payments or other remuneration on account of his or her employment or termination of employment with the Company (or any Affiliate) under any other plan, policy, program or agreement. If, for any reason, a Participant becomes entitled to or receives any other severance, separation, notice or termination payments on account of his or her employment or termination of employment with the Company (or any Affiliate), including, for example, any payments required to be paid to the Participant under any Federal, State or local law (including, without limitation, the Worker Adjustment and Retraining Notification Act or “WARN”) or pursuant to any agreement (except unemployment benefits payable in accordance with state law and payment for accrued but unused vacation), his or her benefits under the Plan will be reduced by the amount of such other payments paid or payable. An Employee must notify the Plan Administrator if he or she receives or is claiming to be entitled to receive any such payment(s).
Nothing herein shall preclude the Company from providing, in its sole and absolute discretion and on a selective and non-uniform basis, any payments or benefits to any Employee in connection with his or her termination of employment that are in addition to the payments and benefits provided for under the Plan.
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ARTICLE V
NOTICE OF TERMINATION
Each Employee who may become entitled to Severance Pay and other benefits under the Plan in connection with an involuntary Eligible Termination of Employment shall receive written notice of termination from the Company for a minimum period of time equal to such Participant’s Notice Period, as determined under the following chart:
Grade | Notice Period |
EMC | 12 Weeks |
420 | 12 Weeks |
418 | 8 Weeks |
416 | 4 Weeks |
414 | 4 Weeks |
412 | 3 Weeks |
410 | 3 Weeks |
Below 410 | 2 Weeks |
Notwithstanding the foregoing, the Company, in its sole discretion, may remove the Employee from the Company’s payroll (and the date of such removal shall be the Participant’s Termination Date) and pay the Employee for the remaining applicable Notice Period in lieu of providing notice (or full notice) hereunder, which amount will be equal to one Week (or partial Week) of Base Pay in effect on his or her Termination Date for each week (or partial week) of advance notice that the Employee would otherwise have received (but did not receive). This payment in lieu of notice is in addition to any other payments for which the Employee is eligible under the Plan and shall be paid at the same time as Severance Pay is paid to such Participant. Any notice (or pay in lieu of notice) to which an Employee is entitled to receive is inclusive of, and not in addition to, and shall run concurrently with, any advance notice of an involuntary termination of employment that the Company is obligated to give the Employee under applicable federal, state or local law, including, without limitation, WARN and/or under any applicable garden leave or similar policy of the Company.
ARTICLE VI
HOW AND WHEN SEVERANCE BENEFITS WILL BE PAID
Except as provided in the following paragraph or otherwise specifically provided in the Plan, any amounts due to a Participant will be paid in a single lump sum 60 days following the Participant’s Termination Date.
Notwithstanding anything in this Plan to the contrary, if the aggregate of all amounts payable to a Participant under the Plan (when combined with similar amounts payable to the Participant under any other agreements, methods, programs, or other arrangements with respect to which deferrals of compensation are treated with the Plan as having been deferred under a single nonqualified deferred compensation plan under Treasury Regulation Section 1.409A-1(c)(2)) exceeds the lesser of two times (i) the Participant’s annual rate of pay for the year prior to the year of his or her Termination Date or (ii) the maximum amount that may be taken into
11
account under a qualified pension plan pursuant to Section 401(a)(17) of the Code for the year of his or her Termination Date, such amount that exceeds the above limit shall be paid to the Participant on the 30 th day following the six month anniversary of the Participant’s Termination Date or, if earlier, the Participant’s death.
If a Participant receives Severance Pay and is re-hired by the Company or any Affiliate before his or her Severance Period expires, then the Participant must repay to the Company an amount equal to the sum of a Week of Base Pay for such Participant and the applicable COBRA premium subsidy amount used to determine his or her Benefits Payment (determined on a weekly basis), multiplied by the difference between the number of weeks of Base Severance paid to the Participant and the actual number of weeks between the Participant’s Termination Date and the date on which the Participant is rehired.
All amounts payable under the Plan are subject to Federal, state and local income and Social Security tax withholdings and any other withholdings mandated by law.
In the event that a Participant dies before receiving the payments due to the Participant under the Plan, any remaining amounts will be paid to the appointed administrator, executor or personal representative of the Participant’s estate as soon as administratively possible following the Participant’s death.
ARTICLE VII
MISCELLANEOUS PROVISIONS
1. Amendment and Termination . The Company reserves the right, in its sole and absolute discretion, to terminate, modify and amend the Plan in whole or in part, at any time, for any reason, with or without advance notice; provided, however, that, unless otherwise required by applicable law or regulation, no termination, modification or amendment: (i) may adversely affect the rights of a Participant whose Agreement and General Release has become effective, or (ii) shall be made within two years after a Change of Control or prior to a Change of Control while an agreement is in effect under which the Change of Control is to be effected, if such termination, modification or amendment would adversely affect the rights of Employees under the Plan. No individual may become entitled to additional benefits or other rights under the Plan after the Plan is terminated.
2. No Additional Rights Created . Neither the establishment of this Plan, nor any modification thereof, nor the payment of any benefits hereunder, shall be construed as giving to any Participant, Employee or other person any legal or equitable right against the Company or any officer, director or employee thereof; and in no event shall the terms and conditions of employment by the Company of any Employee be modified or in any way affected by this Plan.
3. Records . The records of the Company with respect to Continuous Service; employment history; STI awards, estimates or guarantees; Base Pay; absences; employee benefits; and all other relevant matters shall be conclusive for all purposes of this Plan.
4. Construction . The respective terms and provisions of the Plan shall be construed, whenever possible, to be in conformity with the requirements of ERISA, or any subsequent laws or amendments thereto. To the extent not in conflict with the preceding sentence or another
12
provision in the Plan, the construction and administration of the Plan shall be in accordance with the laws of the State of New York applicable to contracts made and to be performed within the State of New York (without reference to its conflicts of law provisions).
5. Severability . Should any provisions of the Plan be deemed or held to be unlawful or invalid for any reason, such fact shall not adversely affect the other provisions of the Plan unless such determination shall render impossible or impracticable the functioning of the Plan, and in such case, an appropriate provision or provisions shall be adopted so that the Plan may continue to function properly.
6. Incompetency . In the event that the Plan Administrator finds that a Participant is unable to care for his or her affairs because of illness or accident, then benefits payable hereunder, unless claim has been made therefor by a duly appointed guardian, committee, or other legal representative, may be paid in such manner as the Plan Administrator shall determine, and the application thereof shall be a complete discharge of all liability for any payments or benefits to which such Participant was or would have been otherwise entitled under this Plan.
7. Plan Not a Contract of Employment . Nothing contained in this Plan shall be held or construed to create any liability upon the Company to retain any Employee in its service. All Employees shall remain subject to discharge or discipline to the same extent as if the Plan had not been put into effect.
8. Financing . The benefits payable under this Plan shall be paid out of the general assets of the Company. No Participant or any other person shall have any interest whatsoever in any specific asset of the Company. To the extent that any person acquires a right to receive payments under this Plan, such right shall not be secured by any assets of the Company.
9. Successors; Binding Obligation.
(a) This Plan shall not be terminated by any merger or consolidation of CIT whereby CIT is or is not the surviving or resulting corporation or as a result of any transfer of all or substantially all of the assets of CIT or a purchase of the securities of CIT. In the event of any such merger, consolidation, transfer of assets or purchase, the provisions of this Plan shall be binding upon the surviving or resulting corporation or the person or entity to which such assets are transferred.
(b) The Company agrees that concurrently with any merger, consolidation, transfer of assets or purchase of the securities of CIT referred to in paragraph (a) of this Section 9, it will cause any successor or transferee unconditionally to assume all of the obligations of the Company hereunder.
10. Nontransferability . In no event shall the Company make any payment under this Plan to any assignee or creditor of a Participant, except as otherwise required by law. Prior to the time of a payment hereunder, a Participant shall have no rights by way of anticipation or otherwise to assign or otherwise dispose of any interest under this Plan, nor shall rights be assigned or transferred by operation of law.
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ARTICLE VIII
WHAT ELSE A PARTICIPANT NEEDS TO KNOW ABOUT THE PLAN
1. Claims Procedure . Participants will receive the benefits to which they are entitled under the Plan. If an Employee or former Employee (“claimant”) feels he or she has not been provided with all benefits to which he or she is entitled under the Plan, the claimant may file a written claim with the Claims Reviewer with respect to his or her rights to receive benefits from the Plan. This claim must be filed within one year after the claimant’s termination of employment.
A claimant will be notified of the acceptance or denial of his or her claim for benefits within ninety (90) days from the date the Claims Reviewer receives the application. In some cases, a claimant’s request may take more time to review and an additional processing period of up to ninety (90) days may be required. If that happens, the claimant will receive a written notice of that fact, which will also indicate the special circumstances requiring the extension of time and the date by which the Claims Reviewer expects that a determination will be made with respect to the claim. If the extension is required due to the claimant’s failure to submit information necessary to decide the claim, the period for making the determination will be tolled from the date on which the extension notice is sent to the claimant until the date on which the claimant responds to the Plan’s request for information.
If a claimant’s claim is denied in whole or in part, or any adverse benefit determination is made with respect to a claimant’s claim, he or she will be provided with a written notice setting forth the reason for the determination, along with specific references to Plan provisions on which the determination is based. This notice also will explain what additional information is needed to evaluate the claim (and why such information is necessary), together with an explanation of the Plan’s claims review procedure and the time limits applicable to such procedure, as well as a statement of the claimant’s right to request arbitration as set forth below (in lieu of bringing a civil action under Section 502(a) of ERISA) following an adverse benefit determination on review. If a claimant is not notified (of the denial or an extension) within ninety (90) days from the date the claimant notifies the Claims Reviewer, the claimant may request a review of his or her application as if the claimant’s claim had been denied.
If a claimant’s claim has been denied, the claimant may request that the Claims Administrator review the denial, by filing a request with the Plan Administrator. The request must be in writing and must be made within sixty (60) days after written notification of denial. In connection with this request, the claimant (or his or her duly authorized representative) may (i) be provided, upon written request and free of charge, with reasonable access to (and copies of) all documents, records, and other information relevant to the claim; and (ii) submit to the Plan Administrator (for forwarding to the Claims Administrator) written comments, documents, records, and other information related to the claim.
The review by the Claims Administrator will take into account all comments, documents, records, and other information the claimant submits relating to the claim. The Claims Administrator will make a final written decision on a claim review, in most cases within sixty (60) days after receipt of a request for a review. In some cases, the claim may take more time to review, and an additional processing period of up to sixty (60) days may be required. If that
14
happens, the claimant will receive a written notice of that fact, which will also indicate the special circumstances requiring the extension of time and the date by which the Claims Administrator expects to make a determination with respect to the claim. If the extension is required due to the claimant’s failure to submit information necessary to decide the claim, the period for making the determination will be tolled from the date on which the extension notice is sent to the claimant until the date on which the claimant responds to the Plan’s request for information.
The Claims Administrator’s decision on a claimant’s claim for review will be communicated to the claimant in writing. If an adverse benefit determination is made with respect to a claimant’s claim, the notice will include (i) the specific reason(s) for any adverse benefit determination, with references to the specific Plan provisions on which the determination is based; (ii) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to (and copies of) all documents, records and other information relevant to the claim; and (iii) a statement of the claimant’s right to request arbitration as set forth below, in lieu of bringing a civil action under Section 502(a) of ERISA.
The decision of the Claims Administrator (or its designee) is final and binding on all parties.
These procedures must be exhausted before a claimant may request arbitration as set forth below regarding payment of benefits under the Plan. A claimant may not request arbitration regarding payment of benefits more than one year after the claimant receives written notice of the decision on the claimant’s claim for review.
2. Mandatory Arbitration
In lieu of a claimant’s right to bring a civil action under Section 502(a) of ERISA, any and all disputes, claims, or controversies arising out of or relating to this Plan or the breach, termination, enforcement, interpretation or validity thereof, including any and all claims arising under ERISA, and including the determination of the scope or applicability of this requirement to arbitrate, shall be determined by final and binding arbitration in the State of New York before one arbitrator.
Any claim must be brought in the respective party’s individual capacity, and not as a plaintiff or class member in any purported class, collective, representative, multiple plaintiff, or similar proceeding (“Class Action”). The claimant expressly waives any ability to maintain any Class Action in any forum. The arbitrator shall not have authority to combine or aggregate similar claims or conduct any Class Action nor make an award to any person or entity not a party to the arbitration.
The arbitrator must possess a juris doctorate degree and have significant experience in employment law.
The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures and in accordance with the Expedited Procedures in those Rules (as they exist on the Effective Date). The claimant and the Company adopt and agree to implement the
15
JAMS Optional Arbitration Appeal Procedure (as it exists on the Effective Date) with respect to any final award in an arbitration arising out of or related to the Plan.
The arbitration will be governed by the Federal Arbitration Act (9 U.S.C. Secs. 1-16), ERISA, and, to the extent ERISA does not apply, the laws of the State of New York exclusive of conflict or choice of law rules.
The parties shall maintain the confidential nature of the arbitration proceeding, hearing and award, except as may be necessary to prepare for or conduct the hearing on the merits, or except as may be necessary in connection with a court application for a preliminary remedy, a judicial challenge to an award or its enforcement, or unless otherwise required by applicable law, regulation, subpoena, court order, administrative ruling, or judicial decision, or to enforce the terms of the award. The parties may disclose the existence, terms, and conditions of the arbitration proceeding, hearing and award, but only as necessary, to their legal advisors, accountants, auditors, regulators, experts, or other advisors, provided that the claimant or the Company makes the person to whom disclosure is made aware of the confidential nature of the arbitration proceeding, hearing and award, and such person agrees to maintain such confidentiality.
In any arbitration arising out of or related to this Plan, the arbitrator is not empowered to award punitive, compensatory, consequential, extracontractual or exemplary damages.
The arbitration award shall be accompanied by a statement of reasons.
The determination of the arbitrator shall be conclusive and binding on the parties, and judgment on the award may be entered in any court having jurisdiction. This clause shall not preclude the claimant or the Company from seeking provisional remedies in aid of arbitration from a court of appropriate jurisdiction.
3. Plan Interpretation and Benefit Determination .
A. The Plan Administrator, the Claims Reviewer (with respect to initial claims determinations) and the Claims Administrator (with respect to claims appeals determinations) (or, where applicable, any duly authorized delegee of either) shall have the exclusive right, power, and authority, in their sole and absolute discretion, to administer, apply and interpret the Plan and any other documents and to decide all factual and legal matters arising in connection with the operation or administration of the Plan.
B. Without limiting the generality of the foregoing paragraph, the Plan Administrator, the Claims Reviewer (with respect to initial claims determinations) and the Claims Administrator (with respect to claims appeals determinations) (or, where applicable, any duly authorized delegee of either) shall have the sole and absolute discretionary authority to:
1. take all actions and make all decisions (including factual decisions) with respect to the eligibility for, and the amount of, benefits payable under the Plan;
2. formulate, interpret and apply rules, regulations and policies necessary to administer the Plan;
16
3. decide all questions relating to the calculation and payment of benefits, and all other determinations made, under the Plan;
4. resolve and/or clarify any factual or other ambiguities, inconsistencies and omissions arising under the Plan or other Plan documents; and
5. process, and approve or deny, benefit claims and rule on any benefit exclusions.
All interpretations and determinations made by the Plan Administrator or the Claims Administrator (with respect to decisions relating to denied claims for benefits) (or, where applicable, any duly authorized delegee of either) under the Plan shall be final and binding on the Employee, Participant, beneficiary, and all other parties affected thereby.
4. Miscellaneous .
The Plan Administrator keeps records of the Plan and is responsible for the administration of the Plan. The Plan Administrator will also answer any questions a Participant may have about the Plan.
Service of legal process may be made upon the Plan Administrator.
To the fullest extent applicable, severance and other benefits payable under the Plan are intended to be exempt from the definition of “nonqualified deferred compensation” under Code Section 409A in accordance with one or more of the exemptions available under the final Treasury regulations promulgated under Code Section 409A and, to the extent that any such amount or benefit is or becomes subject to Code Section 409A due to a failure to qualify for an exemption from the definition of nonqualified deferred compensation in accordance with such final Treasury regulations, the Plan is intended to comply with the applicable requirements of Code Section 409A with respect to such amounts or benefits. The Plan shall be interpreted and administered to the extent possible in a manner consistent with the foregoing statement of intent. An Eligible Termination of Employment shall not be deemed to have occurred for purposes of any provision of this Plan providing for payment of amounts that constitute “nonqualified deferred compensation” unless or until such Eligible Termination of Employment is also a “separation from service” from the Company within the meaning of Code Section 409A. Notwithstanding anything contained in the Plan to the contrary, whenever a payment under the Plan may be paid within a specified period or on a specified date, the actual date of payment within the specified period or based on such date shall be within the Company’s sole discretion, so long as the payment is made within a period permitted under Code Section 409A (as determined by the Company). Notwithstanding anything contained in the Plan to contrary, the Company shall not be liable for any taxes, penalties or interest that may be imposed on a Participant (or other person) under Code Section 409A.
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Appendix A
List of Affiliates Excluded from Company
C2 Aviation Capital, Inc. (and its subsidiaries) 1
1 Employees of C2 Aviation Capital, Inc. (and/or its subsidiaries) are not eligible for benefits under the Plan (as amended and restated in this document), but remain subject to the terms and conditions of the Prior Plan.
Quarters Ended
|
Nine Months Ended
|
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30,
2016 |
June 30,
2016 |
September 30,
2015 |
September 30,
2016 |
September 30,
2015 |
|||||||||||||||||||
Earnings:
|
|||||||||||||||||||||||
Net
income
|
$ | 132.8 | $ | 14.1 | $ | 693.1 | $ | 293.8 | $ | 912.1 | |||||||||||||
Provision for
income taxes continuing operations
|
77.0 | 94.3 | (560.0 | ) | 224.0 | (478.2 | ) | ||||||||||||||||
Loss from
discontinued operation, net of taxes
|
15.6 | 167.0 | 3.7 | 187.4 | 3.7 | ||||||||||||||||||
Income from
continuing operations, before provision for income taxes
|
225.4 | 275.4 | 136.8 | 705.2 | 437.6 | ||||||||||||||||||
Fixed
Charges:
|
|||||||||||||||||||||||
Interest and
debt expenses on indebtedness
|
279.4 | 282.5 | 280.3 | 848.3 | 816.8 | ||||||||||||||||||
Interest
factor: one-third of rentals on real and personal properties
|
4.2 | 4.5 | 3.4 | 11.9 | 7.2 | ||||||||||||||||||
Total fixed
charges for computation of ratio
|
283.6 | 287.0 | 283.7 | 860.2 | 824.0 | ||||||||||||||||||
Total earnings
before provision for income taxes and fixed charges
|
$ | 509.0 | $ | 562.4 | $ | 420.5 | $ | 1,565.4 | $ | 1,261.6 | |||||||||||||
Ratios of
earnings to fixed charges
|
1.79 | x | 1.96 | x | 1.48 | x | 1.82 | x | 1.53 | x |
|
/s/ Ellen R. Alemany
|
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|
Ellen R. Alemany
Chairwoman and Chief Executive Officer CIT Group Inc. |
|
/s/ E. Carol Hayles
|
|||
|
E.
Carol Hayles
Executive Vice President and Chief Financial Officer CIT Group Inc. |
|
/s/ Ellen R. Alemany
|
|||
|
Ellen R. Alemany
Chairwoman and Chief Executive Officer CIT Group Inc. |
|
/s/ E. Carol Hayles
|
|||
|
E.
Carol Hayles
Executive Vice President and Chief Financial Officer CIT Group Inc. |