|X| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
| | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
For the quarterly period ended March 31, 2018
|
|
|
|
Delaware
(State or other jurisdiction of incorporation or organization)
|
|
65-1051192
(IRS Employer Identification Number)
|
|
|
|
11 West 42nd Street New York, New York
(Address of Registrant’s principal executive offices)
|
|
10036
(Zip Code)
|
|
|
|
(212) 461-5200
(Registrant’s telephone number)
|
|
|
CONTENTS
|
Item 1.
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||
|
||
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||
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||
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||
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||
|
||
Item 2.
|
||
|
and
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Item 3.
|
||
Item 4.
|
||
Item 1.
|
|
|
Item 1A.
|
||
Item 2.
|
||
Item 4.
|
||
Item 6.
|
||
CIT GROUP INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(dollars in millions — except share data)
|
||||||||
|
|
|
|
|||||
|
March 31, 2018
|
|
December 31, 2017
|
|||||
Assets
|
|
|
|
|
|
|||
Cash and due from banks, including restricted balances of $34.7 and $42.9 at March 31, 2018 and December 31, 2017
(1)
, respectively (see Note 6 for amounts pledged)
|
$
|
200.9
|
|
|
$
|
278.6
|
|
|
Interest bearing deposits, including restricted balances of $82.3 and $81.8 at March 31, 2018 and December 31, 2017
(1)
, respectively (see Note 6 for amounts pledged)
|
3,895.4
|
|
|
1,440.1
|
|
|||
Securities purchased under agreement to resell
|
250.0
|
|
|
150.0
|
|
|||
Investment securities, including securities carried at fair value with changes recorded in net income of $44.1 at March 31, 2018 and $0.4 at December 31, 2017 (see Note 6 for amounts pledged)
|
5,910.5
|
|
|
6,469.9
|
|
|||
Assets held for sale
(1)
|
2,298.8
|
|
|
2,263.1
|
|
|||
Loans (see Note 6 for amounts pledged)
|
29,453.6
|
|
|
29,113.9
|
|
|||
Allowance for loan losses
|
(447.6
|
)
|
|
(431.1
|
)
|
|||
Total loans, net of allowance for loan losses
(1)
|
29,006.0
|
|
|
28,682.8
|
|
|||
Operating lease equipment, net (see Note 6 for amounts pledged)
(1)
|
6,774.9
|
|
|
6,738.9
|
|
|||
Bank-owned life insurance
|
795.1
|
|
|
788.6
|
|
|||
Goodwill
|
369.9
|
|
|
369.9
|
|
|||
Other assets, including $118.7 and $68.7 at March 31, 2018 and December 31, 2017, respectively, at fair value
|
1,577.9
|
|
|
1,595.5
|
|
|||
Assets of discontinued operations
(1)
|
463.1
|
|
|
501.3
|
|
|||
Total Assets
|
$
|
51,542.5
|
|
|
$
|
49,278.7
|
|
|
Liabilities
|
|
|
|
|
|
|||
Deposits
|
$
|
30,593.9
|
|
|
$
|
29,569.3
|
|
|
Credit balances of factoring clients
|
1,549.0
|
|
|
1,468.6
|
|
|||
Other liabilities, including $215.4 and $198.1 at March 31, 2018 and December 31, 2017, respectively, at fair value
|
1,338.9
|
|
|
1,437.1
|
|
|||
Borrowings, including $1,875.0 and $1,626.3 contractually due within twelve months at March 31, 2018 and December 31, 2017, respectively
|
10,437.3
|
|
|
8,974.4
|
|
|||
Liabilities of discontinued operations
(1)
|
496.6
|
|
|
509.3
|
|
|||
Total Liabilities
|
44,415.7
|
|
|
41,958.7
|
|
|||
Stockholders’ Equity
|
|
|
|
|
||||
|
|
|
|
|||||
Preferred Stock: $0.01 par value, 100,000,000 authorized, 325,000 shares issued and outstanding
|
325.0
|
|
—
|
|
325.0
|
|
||
Common Stock: $0.01 par value, 600,000,000 authorized
|
|
|
|
|||||
Issued: 208,830,397 and 207,628,491 at March 31, 2018 and December 31, 2017, respectively
|
2.1
|
|
|
2.1
|
|
|||
Outstanding: 128,418,283 and 131,352,924 at March 31, 2018 and December 31, 2017, respectively
|
|
|
|
|
|
|||
Paid-in capital
|
8,811.8
|
|
|
8,798.1
|
|
|||
Retained earnings
|
1,982.7
|
|
|
1,906.5
|
|
|||
Accumulated other comprehensive loss
|
(149.9
|
)
|
|
(86.5
|
)
|
|||
Treasury stock: 80,412,114 and 76,275,567 shares at March 31, 2018 and December 31, 2017 at cost, respectively
|
(3,844.9
|
)
|
|
(3,625.2
|
)
|
|||
Total Common Stockholders’ Equity
|
6,801.8
|
|
|
6,995.0
|
|
|||
Total Equity
|
7,126.8
|
|
|
7,320.0
|
|
|||
Total Liabilities and Equity
|
$
|
51,542.5
|
|
|
$
|
49,278.7
|
|
(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 Company’s 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 Company’s interest in the VIEs, are not available to the creditors of CIT or any affiliates of CIT.
|
Assets
|
|
|
|
|
|
||
Cash and interest bearing deposits, restricted
|
$
|
80.5
|
|
|
$
|
80.4
|
|
Total loans, net of allowance for loan losses
|
2.7
|
|
|
119.1
|
|
||
Operating lease equipment, net
|
771.8
|
|
|
763.3
|
|
||
Total Assets
|
$
|
855.0
|
|
|
$
|
962.8
|
|
Liabilities
|
|
|
|
|
|
||
Beneficial interests issued by consolidated VIEs (classified as long-term borrowings)
|
$
|
484.6
|
|
|
$
|
566.6
|
|
Total Liabilities
|
$
|
484.6
|
|
|
$
|
566.6
|
|
CIT GROUP INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(dollars in millions — except per share data)
|
|
|||||||
|
|
|
|
|
||||
|
Quarters Ended March 31,
|
|
||||||
|
2018
|
|
2017
|
|
||||
Interest income
|
|
|
|
|
|
|
||
Interest and fees on loans
|
$
|
400.9
|
|
|
$
|
412.1
|
|
|
Other interest and dividends
|
50.3
|
|
|
43.6
|
|
|
||
Interest income
|
451.2
|
|
|
455.7
|
|
|
||
Interest expense
|
|
|
|
|
|
|
||
Interest on borrowings
|
83.4
|
|
|
69.1
|
|
|
||
Interest on deposits
|
97.1
|
|
|
94.0
|
|
|
||
Interest expense
|
180.5
|
|
|
163.1
|
|
|
||
Net interest revenue
|
270.7
|
|
|
292.6
|
|
|
||
Provision for credit losses
|
68.8
|
|
|
49.7
|
|
|
||
Net interest revenue, after credit provision
|
201.9
|
|
|
242.9
|
|
|
||
Non-interest income
|
|
|
|
|
|
|
||
Rental income on operating leases
|
253.6
|
|
|
251.3
|
|
|
||
Other non-interest income
|
104.7
|
|
|
79.1
|
|
|
||
Total non-interest income
|
358.3
|
|
|
330.4
|
|
|
||
Total revenue, net of interest expense and credit provision
|
560.2
|
|
|
573.3
|
|
|
||
Non-interest expenses
|
|
|
|
|
|
|
||
Depreciation on operating lease equipment
|
76.4
|
|
|
73.5
|
|
|
||
Maintenance and other operating lease expenses
|
57.4
|
|
|
53.8
|
|
|
||
Operating expenses
|
281.3
|
|
|
311.6
|
|
|
||
Loss on debt extinguishment and deposit redemption
|
0.1
|
|
|
—
|
|
|
||
Total non-interest expenses
|
415.2
|
|
|
438.9
|
|
|
||
Income from continuing operations before benefit (provision) for income taxes
|
145.0
|
|
|
134.4
|
|
|
||
Provision for income taxes
|
41.3
|
|
|
56.2
|
|
|
||
Income from continuing operations
|
103.7
|
|
|
78.2
|
|
|
||
Discontinued Operations
|
|
|
|
|
|
|
||
Income (loss) from discontinued operations, net of taxes
|
(6.7
|
)
|
|
89.0
|
|
|
||
Gain on sale of discontinued operations, net of taxes
|
—
|
|
|
12.7
|
|
|
||
Total income (loss) from discontinued operations, net of taxes
|
(6.7
|
)
|
|
101.7
|
|
|
||
Net Income
|
$
|
97.0
|
|
|
$
|
179.9
|
|
|
Basic income per common share
|
|
|
|
|
|
|||
Income from continuing operations
|
$
|
0.79
|
|
|
$
|
0.39
|
|
|
Income (loss) from discontinued operations
|
(0.05
|
)
|
|
0.50
|
|
|
||
Basic income per share
|
$
|
0.74
|
|
|
$
|
0.89
|
|
|
Diluted income per common share
|
|
|
|
|
|
|||
Income from continuing operations
|
$
|
0.79
|
|
|
$
|
0.38
|
|
|
Income (loss) from discontinued operations
|
(0.05
|
)
|
|
0.50
|
|
|
||
Diluted income per share
|
$
|
0.74
|
|
|
$
|
0.88
|
|
|
Average number of common shares (thousands)
|
|
|
|
|
|
|||
Basic
|
130,483
|
|
|
202,449
|
|
|
||
Diluted
|
131,588
|
|
|
203,348
|
|
|
||
Dividends declared per common share
|
$
|
0.16
|
|
|
$
|
0.15
|
|
|
CIT GROUP INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(dollars in millions)
|
|
|||||||
|
|
|
|
|
||||
|
Quarters Ended March 31,
|
|
||||||
|
2018
|
|
2017
|
|
||||
Net Income
|
$
|
97.0
|
|
|
$
|
179.9
|
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
||||
Foreign currency translation adjustments
|
(2.4
|
)
|
|
12.8
|
|
|
||
Net unrealized gains (losses) on available for sale securities
|
(63.9
|
)
|
|
2.7
|
|
|
||
Changes in benefit plans net gain (loss) and prior service (cost)/credit
|
3.4
|
|
|
0.9
|
|
|
||
Other comprehensive income (loss), net of tax
|
(62.9
|
)
|
|
16.4
|
|
|
||
Comprehensive income
|
$
|
34.1
|
|
|
$
|
196.3
|
|
|
CIT GROUP INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)
(dollars in millions)
|
|||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Preferred Stock
|
|
Common
Stock
|
|
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Treasury
Stock
|
|
Noncontrolling
Minority
Interests
|
|
Total
Equity
|
||||||||||||||||
December 31, 2017
|
$
|
325.0
|
|
|
$
|
2.1
|
|
|
$
|
8,798.1
|
|
|
$
|
1,906.5
|
|
|
$
|
(86.5
|
)
|
|
$
|
(3,625.2
|
)
|
|
$
|
—
|
|
|
$
|
7,320.0
|
|
Adoption of Accounting Standard Updates 2016-01, 2016-16, and 2018-02
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|
0.2
|
|
||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
97.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
97.0
|
|
||||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(62.9
|
)
|
|
—
|
|
|
—
|
|
|
(62.9
|
)
|
||||||||
Dividends paid
|
—
|
|
|
—
|
|
|
—
|
|
|
(21.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21.5
|
)
|
||||||||
Share repurchases
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(194.9
|
)
|
|
—
|
|
|
(194.9
|
)
|
||||||||
Amortization of restricted stock, stock option and performance shares expenses
|
—
|
|
|
—
|
|
|
13.0
|
|
|
—
|
|
|
—
|
|
|
(24.8
|
)
|
|
—
|
|
|
(11.8
|
)
|
||||||||
Employee stock purchase plan
|
—
|
|
|
—
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
||||||||
March 31, 2018
|
$
|
325.0
|
|
|
$
|
2.1
|
|
|
$
|
8,811.8
|
|
|
$
|
1,982.7
|
|
|
$
|
(149.9
|
)
|
|
$
|
(3,844.9
|
)
|
|
$
|
—
|
|
|
$
|
7,126.8
|
|
December 31, 2016
|
$
|
—
|
|
|
$
|
2.1
|
|
|
$
|
8,765.8
|
|
|
$
|
1,553.0
|
|
|
$
|
(140.1
|
)
|
|
$
|
(178.1
|
)
|
|
$
|
0.4
|
|
|
$
|
10,003.1
|
|
Adoption of Accounting Standard Update 2016-09
|
—
|
|
|
—
|
|
|
1.0
|
|
|
(1.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
179.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
179.9
|
|
||||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16.4
|
|
|
—
|
|
|
—
|
|
|
16.4
|
|
||||||||
Dividends paid
|
—
|
|
|
—
|
|
|
—
|
|
|
(30.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(30.8
|
)
|
||||||||
Amortization of restricted stock, stock option and performance shares expenses
|
—
|
|
|
—
|
|
|
15.0
|
|
|
—
|
|
|
—
|
|
|
(18.8
|
)
|
|
—
|
|
|
(3.8
|
)
|
||||||||
Employee stock purchase plan
|
—
|
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
||||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
||||||||
March 31, 2017
|
$
|
—
|
|
|
$
|
2.1
|
|
|
$
|
8,782.6
|
|
|
$
|
1,701.1
|
|
|
$
|
(123.7
|
)
|
|
$
|
(196.9
|
)
|
|
$
|
0.3
|
|
|
$
|
10,165.5
|
|
CIT GROUP INC. AND SUBSIDIARIES
|
|
|
|
||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(dollars in millions)
|
|||||||
|
|
|
|
||||
|
Quarters Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Cash Flows From Operations
|
|
|
|
|
|
||
Net income
|
$
|
97.0
|
|
|
$
|
179.9
|
|
Adjustments to reconcile net income to net cash flows from operations:
|
|
|
|
||||
Provision for credit losses
|
68.8
|
|
|
49.7
|
|
||
Depreciation on operating lease equipment
|
76.4
|
|
|
73.5
|
|
||
Amortization of stock compensation expenses
|
13.0
|
|
|
15.0
|
|
||
Net gain on asset sales and impairments on assets held for sale
|
(20.9
|
)
|
|
(35.0
|
)
|
||
Loss on debt extinguishment and other deposit redemption
|
0.1
|
|
|
39.0
|
|
||
Provision for deferred income taxes
|
25.4
|
|
|
113.5
|
|
||
Decrease in finance receivables held for sale
|
7.6
|
|
|
53.8
|
|
||
(Increase) decrease in other assets
|
(33.4
|
)
|
|
21.2
|
|
||
Decrease in other liabilities
|
(112.7
|
)
|
|
(220.4
|
)
|
||
Other operating activities
|
5.8
|
|
|
15.5
|
|
||
Net cash flows provided by operations
|
127.1
|
|
|
305.7
|
|
||
Cash Flows From Investing Activities
|
|
|
|
|
|
||
Changes in loans, net
|
(412.7
|
)
|
|
28.0
|
|
||
Purchases of investment securities
|
(662.4
|
)
|
|
(1,806.2
|
)
|
||
Proceeds from sales and maturities of investment securities
|
1,067.0
|
|
|
1,827.9
|
|
||
Proceeds from asset and receivable sales
|
175.6
|
|
|
393.2
|
|
||
Purchases of assets to be leased and other equipment
|
(148.3
|
)
|
|
(399.5
|
)
|
||
Proceeds from sale of OREO, net of repurchases
|
19.9
|
|
|
28.9
|
|
||
Other investing activities
|
16.1
|
|
|
25.2
|
|
||
Net cash flows provided by investing activities
|
55.2
|
|
|
97.5
|
|
||
Cash Flows From Financing Activities
|
|
|
|
|
|
||
Proceeds from the issuance of term debt and FHLB advances
|
3,061.6
|
|
|
8.5
|
|
||
Repayments of term debt, FHLB advances, and net settlements
|
(1,636.6
|
)
|
|
(1,083.3
|
)
|
||
Net increase in deposits
|
1,023.3
|
|
|
35.0
|
|
||
Repurchase of common stock
|
(194.9
|
)
|
|
—
|
|
||
Dividends paid
|
(21.5
|
)
|
|
(30.8
|
)
|
||
Other financing activities
|
(35.0
|
)
|
|
6.5
|
|
||
Net cash flows provided by (used in) financing activities
|
2,196.9
|
|
|
(1,064.1
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
0.5
|
|
|
3.8
|
|
||
Increase (decrease) in cash, cash equivalents and restricted cash
|
2,379.7
|
|
|
(657.1
|
)
|
||
Cash, cash equivalents, and restricted cash beginning of period
|
1,726.4
|
|
|
7,195.4
|
|
||
Cash, cash equivalents, and restricted cash end of period
|
$
|
4,106.1
|
|
|
$
|
6,538.3
|
|
|
|
|
|
||||
Supplementary Cash Flow Disclosures
|
|
|
|
|
|
||
Interest paid
|
$
|
(200.8
|
)
|
|
$
|
(315.3
|
)
|
Federal, foreign, state and local income taxes (paid) refunded, net
|
$
|
(3.2
|
)
|
|
$
|
0.2
|
|
Supplementary Non Cash Flow Disclosure
|
|
|
|
||||
Transfer of assets from held for investment to held for sale
|
$
|
150.2
|
|
|
$
|
227.2
|
|
Transfer of assets from held for sale to held for investment
|
$
|
20.8
|
|
|
$
|
26.7
|
|
Deposits on flight equipment purchases applied to acquisition of flight equipment purchases, and origination of finance leases, capitalized interest, and buyer furnished equipment
|
$
|
—
|
|
|
$
|
91.2
|
|
Transfers of assets to OREO
|
$
|
9.6
|
|
|
$
|
38.9
|
|
Capital lease unexercised bargain purchase options
|
$
|
—
|
|
|
$
|
17.5
|
|
Commitments extended during the period on affordable housing investment credits
|
$
|
15.0
|
|
|
$
|
—
|
|
|
Quarters Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Cash and due from banks, including restricted balances of $34.7 and $126.8 at March 31, 2018 and March 31, 2017, respectively
|
$
|
200.9
|
|
|
$
|
741.7
|
|
Interest bearing deposits, including restricted balances of $82.3 and $102.8 at March 31, 2018 and March 31, 2017, respectively
|
3,895.4
|
|
|
5,415.2
|
|
||
Cash included in assets of discontinued operations
|
9.8
|
|
|
381.4
|
|
||
Total cash, cash equivalents, and restricted cash shown in the Statements of Cash Flows
|
$
|
4,106.1
|
|
|
$
|
6,538.3
|
|
|
|
|
|
Standard
|
Summary of Guidance
|
Effect on CIT's Financial Statements
|
ASU 2017-08,
Receivables -Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities
Issued March 2017
|
•
ASU 2017-08 shortens the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date.
•
The new guidance applies to all entities that hold investments in callable debt securities for which the amortized cost basis exceeds the amount repayable by the issuer at the earliest call date (i.e., at a premium).
•
This guidance must be adopted on a modified retrospective basis through a cumulative-effect adjustment to retained earnings.
|
•
Effective for CIT as of January 1, 2019.
•
CIT is currently evaluating the impact of this standard on its consolidated financial statements and disclosures and does not intend to early adopt this standard.
|
ASU 2016-02,
Leases (Topic 842)
Issued February 2016
|
•
Lessees will need to recognize all leases longer than twelve months on the consolidated balance sheets as lease liabilities with corresponding right-of-use assets. For Income Statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit thresholds.
•
Lessor accounting remains similar to the current model, but updated to align with certain changes to the lessee model (e.g., certain definitions, such as initial direct costs, have been updated) and the new revenue recognition standard. Lease classifications by lessors are similar, operating, direct financing, or sales-type.
•
The ASU requires both quantitative and qualitative disclosures regarding key information about leasing arrangements. The new standard must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. Early adoption is permitted.
|
•
Effective for CIT as of January 1, 2019.
•
CIT will need to determine the impact where it is both a lessee and a lessor:
•
Lessor accounting: CIT is analyzing the impact of changes to the definition of ‘initial direct costs’ under the new guidance. The new standard has a narrower definition of initial direct costs, which will result in CIT recognizing increased upfront expenses offset by higher yield over the lease term. CIT is currently evaluating the bifurcation of certain non-lease components from lease revenue streams. If goods or services are determined to be a non-lease component and accounted for under ASC 606 or other applicable GAAP guidance, the income recognition may differ from current accounting.
•
Lessee accounting: CIT is continuing to evaluate the impact of the amended guidance on its Condensed consolidated financial statements. CIT expects to recognize right-of-use assets and lease liabilities for substantially all of its operating lease commitments based on the present value of unpaid lease payments as of the date of adoption.
•
CIT management has assembled a project committee to assess the impact of this guidance. Initial scoping and assessment is complete and CIT is continuing to evaluate the impact on its consolidated financial statements and disclosures.
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Net Loans
|
$
|
153.0
|
|
|
$
|
165.8
|
|
Operating lease equipment, net
|
11.4
|
|
|
18.4
|
|
||
Other assets
|
0.1
|
|
|
—
|
|
||
Assets of discontinued operations
|
$
|
164.5
|
|
|
$
|
184.2
|
|
Other liabilities
|
$
|
20.1
|
|
|
$
|
8.8
|
|
Liabilities of discontinued operations
|
$
|
20.1
|
|
|
$
|
8.8
|
|
|
Quarters Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Interest income
|
$
|
2.1
|
|
|
$
|
20.2
|
|
Interest expense
|
1.0
|
|
|
95.9
|
|
||
Rental income on operating leases
|
0.5
|
|
|
306.7
|
|
||
Other income (losses)
|
(1.0
|
)
|
|
13.4
|
|
||
Maintenance and other operating lease expenses
|
—
|
|
|
4.2
|
|
||
Operating expenses
|
0.3
|
|
|
24.9
|
|
||
Loss on debt extinguishment
(1)
|
—
|
|
|
39.0
|
|
||
Income from discontinued operations before provision for income taxes
|
0.3
|
|
|
176.3
|
|
||
Provision for income taxes
|
0.1
|
|
|
78.1
|
|
||
Gain on sale of discontinued operations, net of taxes
|
—
|
|
|
12.7
|
|
||
Income from discontinued operations, net of taxes
|
$
|
0.2
|
|
|
$
|
110.9
|
|
(1)
|
The Company repaid approximately $
1 billion
of secured borrowings in the first quarter of 2017 within discontinued operations and recorded a loss of $
39 million
in relation to the extinguishment of those borrowings.
|
|
Quarters Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net cash flows provided by operations
|
$
|
13.6
|
|
|
$
|
128.1
|
|
Net cash flows provided by investing activities
|
20.1
|
|
|
98.7
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Total cash and deposits, all of which is restricted
|
$
|
9.8
|
|
|
$
|
7.7
|
|
Net Loans
(1)
|
253.7
|
|
|
272.8
|
|
||
Other assets
(2)
|
35.1
|
|
|
36.6
|
|
||
Assets of discontinued operation
|
$
|
298.6
|
|
|
$
|
317.1
|
|
Secured borrowings
(1)
|
$
|
247.8
|
|
|
$
|
268.2
|
|
Other liabilities
(3)
|
228.7
|
|
|
232.3
|
|
||
Liabilities of discontinued operation
|
$
|
476.5
|
|
|
$
|
500.5
|
|
(1)
|
Net loans include $
246.8 million
and $
267.2 million
of securitized balances at
March 31, 2018
and
December 31, 2017
, respectively, and $
6.9 million
and $
5.6 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. The loans serviced for others total $
13.8 billion
and $
14.1 billion
for reverse mortgage loans as of March 31, 2018 and December 31, 2017, respectively.
|
(3)
|
Other liabilities include $
135.3 million
and $
137.8 million
of contingent liabilities, $
79.5 million
of reverse mortgage servicing liabilities and $
13.9 million
and $
15.0 million
of other accrued liabilities at March 31, 2018 and December 31, 2017, respectively.
|
|
Quarters Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Interest income
(1)
|
$
|
2.1
|
|
|
$
|
2.8
|
|
Interest expense
(1)
|
2.1
|
|
|
2.5
|
|
||
Other income
|
6.7
|
|
|
7.3
|
|
||
Operating expenses
(2)
|
16.1
|
|
|
22.7
|
|
||
Loss from discontinued operations before benefit for income taxes
|
(9.4
|
)
|
|
(15.1
|
)
|
||
Benefit for income taxes
(3)
|
(2.5
|
)
|
|
(5.9
|
)
|
||
Loss from discontinued operation, net of taxes
|
$
|
(6.9
|
)
|
|
$
|
(9.2
|
)
|
(1)
|
Includes amortization for the premium associated with the HECM loans and related secured borrowings.
|
(2)
|
For the quarter ended March 31, 2018 and March 31, 2017, operating expense is comprised of approximately $
4 million
and $
5 million
in salaries and benefits, $
1 million
and $
6 million
in professional and legal services, and $
11 million
and $
13 million
for other expenses such as data processing, premises and equipment, and miscellaneous charges, respectively.
|
(3)
|
For the quarters ended
March 31, 2018
and 2017, the Company's tax rate for discontinued operation was
27%
and
39%
, respectively.
|
|
Quarters Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net cash flows used for operation
|
$
|
(3.3
|
)
|
|
$
|
(8.4
|
)
|
Net cash flows provided by investing activities
|
22.1
|
|
|
25.0
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Total cash and deposits
|
$
|
9.8
|
|
|
$
|
7.7
|
|
Net Loans
|
406.7
|
|
|
438.6
|
|
||
Operating lease equipment, net
|
11.4
|
|
|
18.4
|
|
||
Other assets
|
35.2
|
|
|
36.6
|
|
||
Assets of discontinued operations
|
$
|
463.1
|
|
|
$
|
501.3
|
|
Secured borrowings
|
$
|
247.8
|
|
|
$
|
268.2
|
|
Other liabilities
|
248.8
|
|
|
241.1
|
|
||
Liabilities of discontinued operations
|
$
|
496.6
|
|
|
$
|
509.3
|
|
|
Quarters Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Interest income
|
$
|
4.2
|
|
|
$
|
22.9
|
|
Interest expense
|
3.1
|
|
|
98.4
|
|
||
Rental income on operating leases
|
0.5
|
|
|
306.7
|
|
||
Other income (losses)
|
5.7
|
|
|
20.7
|
|
||
Maintenance and other operating lease expenses
|
—
|
|
|
4.2
|
|
||
Operating expenses
|
16.4
|
|
|
47.6
|
|
||
Loss on debt extinguishment
|
—
|
|
|
39.0
|
|
||
Income (loss) from discontinued operations before benefit (provision) for income taxes
|
(9.1
|
)
|
|
161.1
|
|
||
(Benefit) provision for income taxes
|
(2.4
|
)
|
|
72.1
|
|
||
Gain on sale of discontinued operations, net of taxes
|
—
|
|
|
12.7
|
|
||
Income (loss) from discontinued operations, net of taxes
|
$
|
(6.7
|
)
|
|
$
|
101.7
|
|
|
Quarters Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net cash flows provided by operations
|
$
|
10.3
|
|
|
$
|
119.7
|
|
Net cash flows provided by investing activities
|
42.2
|
|
|
123.7
|
|
Loans by Product
(dollars in millions)
|
|||||||
|
|
|
|
||||
|
March 31,
2018 |
|
December 31,
2017 |
||||
Commercial loans
|
$
|
21,163.9
|
|
|
$
|
20,892.1
|
|
Direct financing leases and leveraged leases
|
2,625.2
|
|
|
2,685.8
|
|
||
Total commercial
|
23,789.1
|
|
|
23,577.9
|
|
||
Consumer loans
|
5,664.5
|
|
|
5,536.0
|
|
||
Total loans
|
29,453.6
|
|
|
29,113.9
|
|
||
Loans held for sale
(1)
|
1,085.9
|
|
|
1,095.7
|
|
||
Loans and held for sale loans
(1)
|
$
|
30,539.5
|
|
|
$
|
30,209.6
|
|
(1)
|
Loans held for sale includes loans primarily related to portfolios in Commercial Banking, Consumer Banking and the China portfolio in Non-Strategic Portfolios ("NSP"). As discussed in subsequent tables, since the Company manages the credit risk and collections of loans held for sale consistently with its loans held for investment, the aggregate amount is presented in this table.
|
(1)
|
The Consumer 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 Loans
(dollars in millions)
|
|||||||
|
|
|
|
||||
|
March 31,
2018 |
|
December 31,
2017 |
||||
Unearned income
|
$
|
(726.8
|
)
|
|
$
|
(727.8
|
)
|
Unamortized premiums / (discounts)
|
9.4
|
|
|
3.7
|
|
||
Accretable yield on Purchased Credit-Impaired (“PCI”) loans
|
(1,016.3
|
)
|
|
(1,063.7
|
)
|
||
Net unamortized deferred costs and (fees)
(1)
|
69.6
|
|
|
68.7
|
|
(1)
|
Balance relates to the Commercial Banking segment.
|
Commercial Loans and Held for Sale Loans — Risk Rating by Class / Segment
(dollars in millions)
|
|||||||||||||||||||||||
Grade:
|
Pass
|
|
Special
Mention
|
|
Classified-
accruing
|
|
Classified-
non-accrual
|
|
PCI Loans
|
|
Total
|
||||||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial Banking
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Commercial Finance
|
$
|
8,020.5
|
|
|
$
|
641.1
|
|
|
$
|
1,189.0
|
|
|
$
|
153.2
|
|
|
$
|
10.4
|
|
|
$
|
10,014.2
|
|
Real Estate Finance
|
5,158.3
|
|
|
241.2
|
|
|
183.8
|
|
|
—
|
|
|
39.2
|
|
|
5,622.5
|
|
||||||
Business Capital
|
7,192.3
|
|
|
246.1
|
|
|
263.5
|
|
|
45.6
|
|
|
—
|
|
|
7,747.5
|
|
||||||
Rail
|
120.8
|
|
|
2.5
|
|
|
1.8
|
|
|
—
|
|
|
—
|
|
|
125.1
|
|
||||||
Total Commercial Banking
|
20,491.9
|
|
|
1,130.9
|
|
|
1,638.1
|
|
|
198.8
|
|
|
49.6
|
|
|
23,509.3
|
|
||||||
Consumer Banking
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Other Consumer Banking
(1)
|
398.9
|
|
|
4.2
|
|
|
37.9
|
|
|
—
|
|
|
2.2
|
|
|
443.2
|
|
||||||
Total Consumer Banking
|
398.9
|
|
|
4.2
|
|
|
37.9
|
|
|
—
|
|
|
2.2
|
|
|
443.2
|
|
||||||
Non- Strategic Portfolios
|
31.5
|
|
|
9.6
|
|
|
5.2
|
|
|
12.2
|
|
|
—
|
|
|
58.5
|
|
||||||
Total
|
$
|
20,922.3
|
|
|
$
|
1,144.7
|
|
|
$
|
1,681.2
|
|
|
$
|
211.0
|
|
|
$
|
51.8
|
|
|
$
|
24,011.0
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial Banking
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Commercial Finance
|
$
|
8,284.1
|
|
|
$
|
640.9
|
|
|
$
|
981.9
|
|
|
$
|
134.8
|
|
|
$
|
10.6
|
|
|
$
|
10,052.3
|
|
Real Estate Finance
|
5,228.1
|
|
|
139.9
|
|
|
174.3
|
|
|
2.8
|
|
|
45.1
|
|
|
5,590.2
|
|
||||||
Business Capital
|
7,028.6
|
|
|
269.2
|
|
|
228.8
|
|
|
53.2
|
|
|
—
|
|
|
7,579.8
|
|
||||||
Rail
|
100.6
|
|
|
2.0
|
|
|
1.2
|
|
|
—
|
|
|
—
|
|
|
103.8
|
|
||||||
Total Commercial Banking
|
20,641.4
|
|
|
1,052.0
|
|
|
1,386.2
|
|
|
190.8
|
|
|
55.7
|
|
|
23,326.1
|
|
||||||
Consumer Banking
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Other Consumer Banking
(1)
|
378.5
|
|
|
5.9
|
|
|
31.9
|
|
|
—
|
|
|
2.2
|
|
|
418.5
|
|
||||||
Total Consumer Banking
|
378.5
|
|
|
5.9
|
|
|
31.9
|
|
|
—
|
|
|
2.2
|
|
|
418.5
|
|
||||||
Non- Strategic Portfolios
|
35.7
|
|
|
7.6
|
|
|
10.2
|
|
|
9.8
|
|
|
—
|
|
|
63.3
|
|
||||||
Total
|
$
|
21,055.6
|
|
|
$
|
1,065.5
|
|
|
$
|
1,428.3
|
|
|
$
|
200.6
|
|
|
$
|
57.9
|
|
|
$
|
23,807.9
|
|
Consumer Loan LTV Distribution
(dollars in millions)
|
||||||||||||||||||||
|
Single Family Residential
|
|
|
|
||||||||||||||||
|
Covered Loans
|
|
Non-covered Loans
|
|
Total
Consumer
Loans
|
|
||||||||||||||
LTV Range
|
Non-PCI
|
|
PCI
|
|
Non-PCI
|
|
PCI
|
|
|
|||||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Greater than 125%
|
$
|
3.5
|
|
|
$
|
145.7
|
|
|
$
|
5.8
|
|
|
$
|
—
|
|
|
$
|
155.0
|
|
|
101% – 125%
|
6.0
|
|
|
260.4
|
|
|
4.8
|
|
|
—
|
|
|
271.2
|
|
|
|||||
80% – 100%
|
58.1
|
|
|
538.3
|
|
|
178.9
|
|
|
—
|
|
|
775.3
|
|
|
|||||
Less than 80%
|
1,254.5
|
|
|
895.0
|
|
|
2,304.9
|
|
|
7.8
|
|
|
4,462.2
|
|
|
|||||
Not Applicable
(1)
|
—
|
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|
0.8
|
|
|
|||||
Total
|
$
|
1,322.1
|
|
|
$
|
1,839.4
|
|
|
$
|
2,495.2
|
|
|
$
|
7.8
|
|
|
$
|
5,664.5
|
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Greater than 125%
|
$
|
2.7
|
|
|
$
|
160.0
|
|
|
$
|
7.7
|
|
|
$
|
—
|
|
|
$
|
170.4
|
|
|
101% – 125%
|
6.4
|
|
|
291.5
|
|
|
4.4
|
|
|
—
|
|
|
302.3
|
|
|
|||||
80% – 100%
|
77.4
|
|
|
566.2
|
|
|
137.3
|
|
|
—
|
|
|
780.9
|
|
|
|||||
Less than 80%
|
1,306.1
|
|
|
878.1
|
|
|
2,089.7
|
|
|
7.7
|
|
|
4,281.6
|
|
|
|||||
Not Applicable
(1)
|
—
|
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|
0.8
|
|
|
|||||
Total
|
$
|
1,392.6
|
|
|
$
|
1,895.8
|
|
|
$
|
2,239.9
|
|
|
$
|
7.7
|
|
|
$
|
5,536.0
|
|
|
(1)
Certain Consumer Loans do not have LTV's.
|
|
|
|
|
|
|
|
|
|
|
Loans and Held for Sale Loans - Delinquency Status
(dollars in millions)
|
|||||||||||||||||||||||||||
|
Past Due
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
30–59 Days
Past Due
|
|
60–89 Days
Past Due
|
|
90 Days or
Greater
|
|
Total
Past Due
|
|
Current
(1)
|
|
PCI Loans
(2)
|
|
Total
|
||||||||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Commercial Banking
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial Finance
|
$
|
17.5
|
|
|
$
|
—
|
|
|
$
|
43.8
|
|
|
$
|
61.3
|
|
|
$
|
9,942.5
|
|
|
$
|
10.4
|
|
|
$
|
10,014.2
|
|
Real Estate Finance
|
10.4
|
|
|
2.9
|
|
|
4.1
|
|
|
17.4
|
|
|
5,565.9
|
|
|
39.2
|
|
|
5,622.5
|
|
|||||||
Business Capital
|
135.8
|
|
|
24.3
|
|
|
18.0
|
|
|
178.1
|
|
|
7,569.4
|
|
|
—
|
|
|
7,747.5
|
|
|||||||
Rail
|
6.5
|
|
|
0.9
|
|
|
0.8
|
|
|
8.2
|
|
|
116.9
|
|
|
—
|
|
|
125.1
|
|
|||||||
Total Commercial Banking
|
170.2
|
|
|
28.1
|
|
|
66.7
|
|
|
265.0
|
|
|
23,194.7
|
|
|
49.6
|
|
|
23,509.3
|
|
|||||||
Consumer Banking
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Legacy Consumer Mortgages
|
79.5
|
|
|
7.3
|
|
|
38.2
|
|
|
125.0
|
|
|
2,091.3
|
|
|
1,847.2
|
|
|
4,063.5
|
|
|||||||
Other Consumer Banking
|
137.5
|
|
|
4.4
|
|
|
0.3
|
|
|
142.2
|
|
|
2,763.8
|
|
|
2.2
|
|
|
2,908.2
|
|
|||||||
Total Consumer Banking
|
217.0
|
|
|
11.7
|
|
|
38.5
|
|
|
267.2
|
|
|
4,855.1
|
|
|
1,849.4
|
|
|
6,971.7
|
|
|||||||
Non-Strategic Portfolios
|
0.7
|
|
|
—
|
|
|
12.2
|
|
|
12.9
|
|
|
45.6
|
|
|
—
|
|
|
58.5
|
|
|||||||
Total
|
$
|
387.9
|
|
|
$
|
39.8
|
|
|
$
|
117.4
|
|
|
$
|
545.1
|
|
|
$
|
28,095.4
|
|
|
$
|
1,899.0
|
|
|
$
|
30,539.5
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Commercial Banking
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Commercial Finance
|
$
|
4.5
|
|
|
$
|
—
|
|
|
$
|
49.3
|
|
|
$
|
53.8
|
|
|
$
|
9,987.9
|
|
|
$
|
10.6
|
|
|
$
|
10,052.3
|
|
Real Estate Finance
|
8.7
|
|
|
—
|
|
|
4.1
|
|
|
12.8
|
|
|
5,532.3
|
|
|
45.1
|
|
|
5,590.2
|
|
|||||||
Business Capital
|
172.2
|
|
|
33.4
|
|
|
19.1
|
|
|
224.7
|
|
|
7,355.1
|
|
|
—
|
|
|
7,579.8
|
|
|||||||
Rail
|
3.9
|
|
|
1.4
|
|
|
0.8
|
|
|
6.1
|
|
|
97.7
|
|
|
—
|
|
|
103.8
|
|
|||||||
Total Commercial Banking
|
189.3
|
|
|
34.8
|
|
|
73.3
|
|
|
297.4
|
|
|
22,973.0
|
|
|
55.7
|
|
|
23,326.1
|
|
|||||||
Consumer Banking
|
|||||||||||||||||||||||||||
Legacy Consumer Mortgages
|
26.7
|
|
|
7.6
|
|
|
34.8
|
|
|
69.1
|
|
|
2,219.5
|
|
|
1,903.5
|
|
|
4,192.1
|
|
|||||||
Other Consumer Banking
|
9.6
|
|
|
0.5
|
|
|
0.4
|
|
|
10.5
|
|
|
2,615.4
|
|
|
2.2
|
|
|
2,628.1
|
|
|||||||
Total Consumer Banking
|
36.3
|
|
|
8.1
|
|
|
35.2
|
|
|
79.6
|
|
|
4,834.9
|
|
|
1,905.7
|
|
|
6,820.2
|
|
|||||||
Non-Strategic Portfolios
|
1.8
|
|
|
7.7
|
|
|
9.4
|
|
|
18.9
|
|
|
44.4
|
|
|
—
|
|
|
63.3
|
|
|||||||
Total
|
$
|
227.4
|
|
|
$
|
50.6
|
|
|
$
|
117.9
|
|
|
$
|
395.9
|
|
|
$
|
27,852.3
|
|
|
$
|
1,961.4
|
|
|
$
|
30,209.6
|
|
(1)
|
Due to their nature, reverse mortgage loans are included in Current, as they do not have contractual payments due at a specified time. During the current quarter, an immaterial error was discovered and corrected relating to the December 31, 2017 Current balance for Legacy Consumer Mortgage; which was understated by $
861 million
, and the Current balance for Other Consumer Banking, which was overstated by $
861 million
. The current presentation reflects the revised Current balances at December 31, 2017.
|
(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.
|
Loans on Non-Accrual Status
(dollars in millions)
(1)
|
|||||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Held for
Investment
|
|
Held for
Sale
|
|
Total
|
|
Held for
Investment
|
|
Held for
Sale
|
|
Total
|
||||||||||||
Commercial Banking
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial Finance
|
$
|
153.2
|
|
|
$
|
—
|
|
|
$
|
153.2
|
|
|
$
|
134.8
|
|
|
$
|
—
|
|
|
$
|
134.8
|
|
Real Estate Finance
|
—
|
|
|
—
|
|
|
—
|
|
|
2.8
|
|
|
—
|
|
|
2.8
|
|
||||||
Business Capital
|
45.6
|
|
|
—
|
|
|
45.6
|
|
|
53.2
|
|
|
—
|
|
|
53.2
|
|
||||||
Total Commercial Banking
|
198.8
|
|
|
—
|
|
|
198.8
|
|
|
190.8
|
|
|
—
|
|
|
190.8
|
|
||||||
Consumer Banking
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Legacy Consumer Mortgages
|
25.2
|
|
|
—
|
|
|
25.2
|
|
|
19.9
|
|
|
—
|
|
|
19.9
|
|
||||||
Other Consumer Banking
|
0.3
|
|
|
—
|
|
|
0.3
|
|
|
0.4
|
|
|
—
|
|
|
0.4
|
|
||||||
Total Consumer Banking
|
25.5
|
|
|
—
|
|
|
25.5
|
|
|
20.3
|
|
|
—
|
|
|
20.3
|
|
||||||
Non-Strategic Portfolios
|
—
|
|
|
12.2
|
|
|
12.2
|
|
|
—
|
|
|
9.8
|
|
|
9.8
|
|
||||||
Total
|
$
|
224.3
|
|
|
$
|
12.2
|
|
|
$
|
236.5
|
|
|
$
|
211.1
|
|
|
$
|
9.8
|
|
|
$
|
220.9
|
|
Repossessed assets and OREO
|
|
|
|
|
|
|
45.6
|
|
|
|
|
|
|
|
|
54.6
|
|
||||||
Total non-performing assets
|
|
|
|
|
|
|
$
|
282.1
|
|
|
|
|
|
|
|
|
$
|
275.5
|
|
||||
Commercial loans past due 90 days or more accruing
|
|
|
|
|
$
|
9.9
|
|
|
|
|
|
|
|
|
$
|
11.7
|
|
||||||
Consumer loans past due 90 days or more accruing
|
|
|
|
|
17.1
|
|
|
|
|
|
|
|
|
20.2
|
|
||||||||
Total Accruing loans past due 90 days or more
|
|
|
|
|
$
|
27.0
|
|
|
|
|
|
|
|
|
$
|
31.9
|
|
(1)
|
Factored receivables within our Business Capital division do not accrue interest and therefore are not considered within non-accrual loan balances; however factored receivables are considered for credit provisioning purposes.
|
(1)
|
As of
March 31, 2018
and December 31, 2017, the table included
$120.4 million
and $
122.5 million
of reverse mortgage loans in the process of foreclosure and
$17.2 million
and $
21.0 million
of reverse mortgage OREO, respectively.
|
Impaired Loans
(dollars in millions)
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
Average Recorded Investment
(3)
|
||||||||||||
|
Recorded
Investment
|
|
Unpaid
Principal
Balance
|
|
Related
Allowance
|
|
Quarter Ended March 31, 2018
|
|
Quarter Ended March 31, 2017
|
||||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Commercial Banking
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Commercial Finance
|
$
|
90.6
|
|
|
$
|
136.7
|
|
|
$
|
—
|
|
|
$
|
71.3
|
|
|
$
|
59.4
|
|
Business Capital
|
10.9
|
|
|
13.0
|
|
|
—
|
|
|
11.3
|
|
|
4.9
|
|
|||||
Real Estate Finance
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|||||
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Commercial Banking
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Commercial Finance
|
74.8
|
|
|
80.3
|
|
|
21.4
|
|
|
85.3
|
|
|
138.9
|
|
|||||
Business Capital
|
7.9
|
|
|
7.9
|
|
|
3.9
|
|
|
9.2
|
|
|
17.2
|
|
|||||
Real Estate Finance
|
—
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
|
9.8
|
|
|||||
Total Impaired Loans
(1)
|
184.2
|
|
|
237.9
|
|
|
25.3
|
|
|
178.5
|
|
|
230.9
|
|
|||||
Total Loans Impaired at Acquisition Date
(2)
|
1,899.0
|
|
|
2,778.5
|
|
|
19.2
|
|
|
1,930.2
|
|
|
2,316.0
|
|
|||||
Total
|
$
|
2,083.2
|
|
|
$
|
3,016.4
|
|
|
$
|
44.5
|
|
|
$
|
2,108.7
|
|
|
$
|
2,546.9
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Commercial Banking
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Commercial Finance
|
$
|
51.9
|
|
|
$
|
72.7
|
|
|
$
|
—
|
|
|
$
|
59.9
|
|
|
|
|
|
Business Capital
|
11.7
|
|
|
13.4
|
|
|
—
|
|
|
5.7
|
|
|
|
|
|||||
Real Estate Finance
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
|
|
|||||
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Commercial Banking
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Commercial Finance
|
95.9
|
|
|
96.1
|
|
|
21.3
|
|
|
136.6
|
|
|
|
|
|||||
Business Capital
|
10.5
|
|
|
10.5
|
|
|
4.3
|
|
|
14.2
|
|
|
|
|
|||||
Real Estate Finance
|
2.7
|
|
|
2.8
|
|
|
0.4
|
|
|
5.6
|
|
|
|
|
|||||
Total Impaired Loans
(1)
|
172.7
|
|
|
195.5
|
|
|
26.0
|
|
|
222.4
|
|
|
|
|
|||||
Total Loans Impaired at Acquisition Date
(2)
|
1,961.4
|
|
|
2,870.2
|
|
|
19.1
|
|
|
2,168.8
|
|
|
|
|
|||||
Total
|
$
|
2,134.1
|
|
|
$
|
3,065.7
|
|
|
$
|
45.1
|
|
|
$
|
2,391.2
|
|
|
|
|
(1)
|
Interest income recorded for the quarter ended
March 31, 2018
while the loans were impaired was
$0.3 million
of which
none
was recognized using the cash-basis method of accounting. Interest income recorded for the year ended
December 31, 2017
while the loans were impaired was
$2.4 million
, of which
none
was recognized using the cash-basis method of accounting.
|
(2)
|
Details of finance loans that were identified as impaired at the Acquisition Date are presented under Loans Acquired with Deteriorated Credit Quality.
|
(3)
|
Average recorded investment for the quarters ended
March 31, 2018
, and
March 31, 2017
and year ended
December 31, 2017
.
|
Purchased Credit Impaired Loans
(dollars in millions)
|
|||||||||||
|
|
|
|
|
|
||||||
March 31, 2018
|
Unpaid
Principal
Balance
|
|
Carrying
Value
|
|
Allowance
for Loan
Losses
|
||||||
Commercial Banking
|
|
|
|
|
|
|
|
|
|||
Commercial Finance
|
$
|
16.3
|
|
|
$
|
10.4
|
|
|
$
|
0.8
|
|
Real Estate Finance
|
49.4
|
|
|
39.2
|
|
|
7.0
|
|
|||
Consumer Banking
|
|
|
|
|
|
|
|||||
Other Consumer Banking
|
2.8
|
|
|
2.2
|
|
|
—
|
|
|||
Legacy Consumer Mortgages
|
2,710.0
|
|
|
1,847.2
|
|
|
11.4
|
|
|||
|
$
|
2,778.5
|
|
|
$
|
1,899.0
|
|
|
$
|
19.2
|
|
December 31, 2017
|
|
|
|
|
|
||||||
Commercial Banking
|
|
|
|
|
|
|
|
|
|||
Commercial Finance
|
$
|
16.4
|
|
|
$
|
10.6
|
|
|
$
|
0.7
|
|
Real Estate Finance
|
60.1
|
|
|
45.1
|
|
|
7.0
|
|
|||
Consumer Banking
|
|
|
|
|
|
|
|||||
Other Consumer Banking
|
3.0
|
|
|
2.2
|
|
|
—
|
|
|||
Legacy Consumer Mortgages
|
2,790.7
|
|
|
1,903.5
|
|
|
11.4
|
|
|||
|
$
|
2,870.2
|
|
|
$
|
1,961.4
|
|
|
$
|
19.1
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
(dollars in millions)
|
Non-
criticized
|
|
Criticized
|
|
Total
|
|
Non-
criticized
|
|
Criticized
|
|
Total
|
||||||||||||
Commercial Finance
|
$
|
—
|
|
|
$
|
10.4
|
|
|
$
|
10.4
|
|
|
$
|
—
|
|
|
$
|
10.6
|
|
|
$
|
10.6
|
|
Real Estate Finance
|
20.4
|
|
|
18.8
|
|
|
39.2
|
|
|
21.8
|
|
|
23.3
|
|
|
45.1
|
|
||||||
Total
|
$
|
20.4
|
|
|
$
|
29.2
|
|
|
$
|
49.6
|
|
|
$
|
21.8
|
|
|
$
|
33.9
|
|
|
$
|
55.7
|
|
Change in Accretable Yield
(dollars in millions)
|
|
Quarters Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Balance, beginning of period
|
$
|
1,063.7
|
|
|
$
|
1,261.4
|
|
Accretion into interest income
|
(44.0
|
)
|
|
(52.6
|
)
|
||
Reclassification from non-accretable difference
|
0.5
|
|
|
33.4
|
|
||
Disposals and Other
|
(3.9
|
)
|
|
(8.5
|
)
|
||
Balance, end of period
|
$
|
1,016.3
|
|
|
$
|
1,233.7
|
|
|
▪
|
The nature of modifications qualifying as TDR’s based upon recorded investment at
March 31, 2018
was comprised of payment deferrals for
27%
and covenant relief and/or other for
73%
.
December 31, 2017
TDR recorded investment was comprised of payment deferrals for
31%
and covenant relief and/or other for
69%
.
|
▪
|
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.
|
▪
|
Interest rate reductions result in lower amounts of interest being charged to the customer, but are a relatively small part of the Company’s restructuring programs. The weighted average change in interest rates for all TDRs occurring during the quarters ended
March 31, 2018
and
2017
was not significant.
|
▪
|
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
March 31, 2018
and
2017
was not significant, as debt forgiveness is a relatively small component of the Company’s modification programs.
|
▪
|
The other elements of the Company’s 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.
|
|
Allowance for Loan Losses and Recorded Investment in Loans
(dollars in millions)
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Commercial
Banking |
|
Consumer
Banking |
|
Total
|
|
Commercial
Banking
|
|
Consumer
Banking
|
|
Total
|
||||||||||||
|
Quarter Ended March 31, 2018
|
|
Quarter Ended March 31, 2017
|
||||||||||||||||||||
Balance - beginning of period
|
$
|
402.2
|
|
|
$
|
28.9
|
|
|
$
|
431.1
|
|
|
$
|
408.4
|
|
|
$
|
24.2
|
|
|
$
|
432.6
|
|
Provision for credit losses
|
67.2
|
|
|
1.6
|
|
|
68.8
|
|
|
49.2
|
|
|
0.5
|
|
|
49.7
|
|
||||||
Other
(1)
|
(2.4
|
)
|
|
—
|
|
|
(2.4
|
)
|
|
(6.2
|
)
|
|
—
|
|
|
(6.2
|
)
|
||||||
Gross charge-offs
(2)
|
(54.6
|
)
|
|
(0.5
|
)
|
|
(55.1
|
)
|
|
(32.4
|
)
|
|
(0.6
|
)
|
|
(33.0
|
)
|
||||||
Recoveries
|
4.8
|
|
|
0.4
|
|
|
5.2
|
|
|
5.0
|
|
|
0.5
|
|
|
5.5
|
|
||||||
Balance - end of period
|
$
|
417.2
|
|
|
$
|
30.4
|
|
|
$
|
447.6
|
|
|
$
|
424.0
|
|
|
$
|
24.6
|
|
|
$
|
448.6
|
|
|
Allowance balance at March 31, 2018
|
|
Allowance balance at March 31, 2017
|
||||||||||||||||||||
Loans individually evaluated for impairment
|
$
|
25.3
|
|
|
$
|
—
|
|
|
$
|
25.3
|
|
|
$
|
39.5
|
|
|
$
|
—
|
|
|
$
|
39.5
|
|
Loans collectively evaluated for impairment
|
384.1
|
|
|
19.0
|
|
|
403.1
|
|
|
376.8
|
|
|
17.5
|
|
|
394.3
|
|
||||||
Loans acquired with deteriorated credit quality
(3)
|
7.8
|
|
|
11.4
|
|
|
19.2
|
|
|
7.7
|
|
|
7.1
|
|
|
14.8
|
|
||||||
Allowance for loan losses
|
$
|
417.2
|
|
|
$
|
30.4
|
|
|
$
|
447.6
|
|
|
$
|
424.0
|
|
|
$
|
24.6
|
|
|
$
|
448.6
|
|
Other reserves
(1)
|
$
|
46.9
|
|
|
$
|
—
|
|
|
$
|
46.9
|
|
|
$
|
49.9
|
|
|
$
|
—
|
|
|
$
|
49.9
|
|
|
Loans at March 31, 2018
|
|
Loans at March 31, 2017
|
||||||||||||||||||||
Loans individually evaluated for impairment
|
$
|
184.2
|
|
|
$
|
—
|
|
|
$
|
184.2
|
|
|
$
|
240.1
|
|
|
$
|
—
|
|
|
$
|
240.1
|
|
Loans collectively evaluated for impairment
|
23,112.1
|
|
|
4,258.3
|
|
|
27,370.4
|
|
|
22,530.7
|
|
|
4,638.6
|
|
|
27,169.3
|
|
||||||
Loans acquired with deteriorated credit quality
(3)
|
49.6
|
|
|
1,849.4
|
|
|
1,899.0
|
|
|
107.8
|
|
|
2,174.2
|
|
|
2,282.0
|
|
||||||
Ending balance
|
$
|
23,345.9
|
|
|
$
|
6,107.7
|
|
|
$
|
29,453.6
|
|
|
$
|
22,878.6
|
|
|
$
|
6,812.8
|
|
|
$
|
29,691.4
|
|
Percent of loans to total loans
|
79.3
|
%
|
|
20.7
|
%
|
|
100
|
%
|
|
77.1
|
%
|
|
22.9
|
%
|
|
100
|
%
|
(1)
|
“Other reserves” represents 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 allowance for loan losses associated with loan 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
$2.6 million
and
$14.8 million
for the quarters ended
March 31, 2018
and 2017, respectively, and related to Commercial Banking for all periods.
|
(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).
|
Investment Securities
(dollars in millions)
|
|||||||
|
|
|
|
||||
|
March 31,
2018 |
|
December 31,
2017 |
||||
Available-for-sale securities
|
|
|
|
|
|
||
Debt securities
|
$
|
5,564.1
|
|
|
$
|
6,123.6
|
|
Securities carried at fair value with changes recorded in net income
|
|
|
|
|
|||
Debt securities
|
—
|
|
|
0.4
|
|
||
Equity securities
(1)
|
44.1
|
|
|
44.7
|
|
||
Non-marketable investments
(2)
|
302.3
|
|
|
301.2
|
|
||
Total investment securities
|
$
|
5,910.5
|
|
|
$
|
6,469.9
|
|
|
Maturities
-
Debt Securities AFS
(dollars in millions)
|
||||||||||
|
|
|||||||||
|
March 31, 2018
|
|||||||||
|
Amortized
Cost
|
|
Fair
Value
|
|
Weighted
Average
Yield
|
|||||
Mortgage-backed securities — U.S. government agency securities
|
|
|
|
|
|
|
|
|
||
After 5 but within 10 years
|
$
|
172.3
|
|
|
$
|
168.6
|
|
|
2.12
|
%
|
Due after 10 years
|
4,693.1
|
|
|
4,557.8
|
|
|
2.56
|
%
|
||
Total
|
4,865.4
|
|
|
4,726.4
|
|
|
2.54
|
%
|
||
Mortgage-backed securities — non-agency securities
|
|
|
|
|
|
|
|
|
||
After 1 but within 5 years
|
12.0
|
|
|
12.1
|
|
|
5.16
|
%
|
||
After 5 but within 10 years
|
5.3
|
|
|
5.7
|
|
|
4.68
|
%
|
||
Due after 10 years
|
208.3
|
|
|
226.2
|
|
|
5.83
|
%
|
||
Total
|
225.6
|
|
|
244.0
|
|
|
5.76
|
%
|
||
U.S. government agency obligations
|
|
|
|
|
|
|
|
|
||
After 1 but within 5 years
|
25.0
|
|
|
24.6
|
|
|
2.26
|
%
|
||
Total
|
25.0
|
|
|
24.6
|
|
|
2.26
|
%
|
||
U.S. Treasury securities
|
|
|
|
|
|
|
||||
Due within 1 year
|
248.1
|
|
|
247.8
|
|
|
1.53
|
%
|
||
After 5 but within 10 years
|
195.6
|
|
|
191.5
|
|
|
2.51
|
%
|
||
Total
|
443.7
|
|
|
439.3
|
|
|
1.96
|
%
|
||
Supranational securities
|
|
|
|
|
|
|||||
After 1 but within 5 years
|
49.9
|
|
|
49.2
|
|
|
2.02
|
%
|
||
Total
|
49.9
|
|
|
49.2
|
|
|
2.02
|
%
|
||
State & municipal bonds
|
|
|
|
|
|
|||||
Due within 1 year
|
0.1
|
|
|
0.1
|
|
|
2.36
|
%
|
||
After 1 but within 5 years
|
0.1
|
|
|
0.1
|
|
|
2.56
|
%
|
||
After 5 but within 10 years
|
0.3
|
|
|
0.3
|
|
|
2.70
|
%
|
||
Due after 10 years
|
13.1
|
|
|
12.8
|
|
|
2.38
|
%
|
||
Total
|
13.6
|
|
|
13.3
|
|
|
2.39
|
%
|
||
Corporate bonds - foreign
|
|
|
|
|
|
|||||
After 1 but within 5 years
|
65.7
|
|
|
67.3
|
|
|
6.11
|
%
|
||
Total
|
65.7
|
|
|
67.3
|
|
|
6.11
|
%
|
||
Total debt securities AFS
|
$
|
5,688.9
|
|
|
$
|
5,564.1
|
|
|
2.66
|
%
|
|
|
December 31, 2017
|
||||||||||||||
|
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
|
$
|
3,492.2
|
|
|
$
|
(30.9
|
)
|
|
$
|
1,151.4
|
|
|
$
|
(31.2
|
)
|
Non-agency securities
|
2.1
|
|
|
—
|
|
|
0.4
|
|
|
(0.5
|
)
|
||||
U.S. government agency obligations
|
24.8
|
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
||||
U.S. Treasury securities
|
199.1
|
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
||||
State & municipal bonds
|
—
|
|
|
—
|
|
|
13.6
|
|
|
(0.4
|
)
|
||||
Supranational securities
|
349.5
|
|
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
||||
Total debt securities AFS
|
4,067.7
|
|
|
(31.6
|
)
|
|
1,165.4
|
|
|
(32.1
|
)
|
||||
Equity securities AFS
|
0.1
|
|
|
(0.2
|
)
|
|
44.5
|
|
|
(0.9
|
)
|
||||
Total securities available-for-sale
|
$
|
4,067.8
|
|
|
$
|
(31.8
|
)
|
|
$
|
1,209.9
|
|
|
$
|
(33.0
|
)
|
Changes in Accretable Yield
(dollars in millions)
|
|
|
|||||
|
Quarters Ended
|
||||||
|
March 31, 2018
|
|
March 31, 2017
|
||||
Balance, beginning of period
|
$
|
101.7
|
|
|
$
|
165.0
|
|
Accretion into interest income
|
(3.8
|
)
|
|
(6.5
|
)
|
||
Reclassifications from non-accretable difference due to improving cash flows
|
0.1
|
|
|
0.1
|
|
||
Reclassifications to non-accretable difference due to decreasing cash flows
|
—
|
|
|
(0.5
|
)
|
||
Disposals and other
|
(22.3
|
)
|
|
—
|
|
||
Balance, end of period
|
$
|
75.7
|
|
|
$
|
158.1
|
|
Borrowings
(dollars in millions)
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||
|
CIT Group Inc.
|
|
Subsidiaries
|
|
Total
|
|
Total
|
||||||||
Senior Unsecured
|
$
|
4,730.8
|
|
|
$
|
—
|
|
|
$
|
4,730.8
|
|
|
$
|
3,737.5
|
|
Subordinated unsecured debt
|
395.9
|
|
|
—
|
|
|
395.9
|
|
|
—
|
|
||||
Secured borrowings:
|
|
|
|
|
|
|
|
|
|
|
|||||
Structured financings
|
—
|
|
|
1,416.1
|
|
|
1,416.1
|
|
|
1,541.4
|
|
||||
FHLB advances
|
—
|
|
|
3,894.5
|
|
|
3,894.5
|
|
|
3,695.5
|
|
||||
Total Borrowings
|
$
|
5,126.7
|
|
|
$
|
5,310.6
|
|
|
$
|
10,437.3
|
|
|
$
|
8,974.4
|
|
Senior Unsecured Notes
(dollars in millions)
|
||||||||
|
|
|
|
|
|
|
||
Maturity Date
|
|
Rate (%)
|
|
Date of Issuance
|
|
Par Value
|
||
February 2019
|
|
5.500%
|
|
February 2012
|
|
$
|
383.0
|
|
February 2019
|
|
3.875%
|
|
February 2014
|
|
1,000.0
|
|
|
May 2020
|
|
5.375%
|
|
May 2012
|
|
435.6
|
|
|
March 2021
|
|
4.125%
|
|
March 2018
|
|
500.0
|
|
|
August 2022
|
|
5.000%
|
|
August 2012
|
|
1,150.0
|
|
|
August 2023
|
|
5.000%
|
|
August 2013
|
|
750.0
|
|
|
March 2025
|
|
5.250%
|
|
March 2018
|
|
500.0
|
|
|
Weighted average rate and total
|
|
4.771%
|
|
|
|
$
|
4,718.6
|
|
|
(1)
|
At
March 31, 2018
, the TRS Transactions related borrowings and pledged assets, respectively, of
$485.0 million
and
$854.3 million
were included in Rail. The TRS Transactions are described in
Note 7 — Derivative Financial Instruments
.
|
(2)
|
At
March 31, 2018
, secured borrowings and pledged assets, respectively, of
$211.5 million
and
$379.9 million
were related to the pending sale of our European Rail business, NACCO, and will be transferred to the buyer upon sale of that business.
|
|
(1)
|
Maximum loss exposure to the unconsolidated VIEs excludes the liability for representations and warranties, corporate guarantees and also excludes servicing advances.
|
Fair and Notional Values of Derivative Financial Instruments
(1)
(dollars in millions)
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
Qualifying Hedges
|
Notional
Amount
|
|
Asset
Fair Value
|
|
Liability
Fair Value
|
|
Notional
Amount
|
|
Asset
Fair Value
|
|
Liability
Fair Value
|
||||||||||||
Foreign currency forward contracts — net investment hedges
|
$
|
989.0
|
|
|
$
|
23.9
|
|
|
$
|
(7.2
|
)
|
|
$
|
977.3
|
|
|
$
|
0.2
|
|
|
$
|
(18.7
|
)
|
Interest rate swap - fair value hedge
(2)
|
250.0
|
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total Qualifying Hedges
|
1,239.0
|
|
|
24.5
|
|
|
(7.2
|
)
|
|
977.3
|
|
|
0.2
|
|
|
(18.7
|
)
|
||||||
Non-Qualifying Hedges
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate swaps
(2)
|
7,686.3
|
|
|
82.4
|
|
|
(65.6
|
)
|
|
7,112.0
|
|
|
60.8
|
|
|
(38.6
|
)
|
||||||
Written options
|
2,722.4
|
|
|
—
|
|
|
(2.2
|
)
|
|
2,744.3
|
|
|
—
|
|
|
(0.7
|
)
|
||||||
Purchased options
|
2,567.0
|
|
|
2.2
|
|
|
—
|
|
|
2,571.5
|
|
|
0.7
|
|
|
—
|
|
||||||
Foreign currency forward contracts
|
1,505.3
|
|
|
9.5
|
|
|
(12.6
|
)
|
|
1,375.5
|
|
|
6.9
|
|
|
(14.9
|
)
|
||||||
Total Return Swap (TRS)
|
189.6
|
|
|
—
|
|
|
(16.2
|
)
|
|
182.4
|
|
|
—
|
|
|
(14.1
|
)
|
||||||
Equity Warrants
|
0.8
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
||||||
Interest Rate Lock Commitments
|
14.6
|
|
|
0.1
|
|
|
—
|
|
|
7.7
|
|
|
0.1
|
|
|
—
|
|
||||||
Forward Sale Commitments on Agency MBS
|
11.5
|
|
|
—
|
|
|
(0.1
|
)
|
|
8.0
|
|
|
—
|
|
|
—
|
|
||||||
Credit derivatives
|
306.3
|
|
|
—
|
|
|
—
|
|
|
285.1
|
|
|
—
|
|
|
—
|
|
||||||
Total Non-qualifying Hedges
|
15,003.8
|
|
|
94.2
|
|
|
(96.7
|
)
|
|
14,287.3
|
|
|
68.5
|
|
|
(68.3
|
)
|
||||||
Total Derivatives
|
$
|
16,242.8
|
|
|
$
|
118.7
|
|
|
$
|
(103.9
|
)
|
|
$
|
15,264.6
|
|
|
$
|
68.7
|
|
|
$
|
(87.0
|
)
|
(1)
|
Presented on a gross basis.
|
(2)
|
Fair value balances include accrued interest.
|
(1)
|
Due to a change in clearinghouse rules, the Company accounts for swap contracts cleared by the Chicago Mercantile Exchange (“CME”) as “settled-to-market” effective January 2017. As a result, variation margin payments are characterized as settlement of the derivative exposure and variation margin balances are netted against the corresponding derivative mark-to-market balances. The Company’s swap contracts cleared by LCH Clearnet (“LCH”) continue to be accounted for as “collateralized-to-market” and variation margin balances are characterized as collateral against derivative exposures. At
March 31, 2018
, gross amounts of recognized assets and liabilities were lower by
$9.5 million
and
$6.0 million
, respectively.
|
(2)
|
The Company’s 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.
|
(3)
|
Collateral pledged or received is included in Other assets or Other liabilities, respectively.
|
|
Derivative Instruments
|
|
March 31, 2018
|
||||||||||
|
Amounts Recognized
|
Derivative
|
|
Hedged Item
|
|
Hedge Ineffectiveness
|
||||||
Hedges of interest rate risk on borrowings using interest rate swaps
|
Interest Expense
|
$
|
0.5
|
|
|
$
|
(0.5
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
Derivative Instrument Gains and Losses
(dollars in millions)
|
|||||||||
|
|
|
|
|
|
||||
|
|
|
Quarters Ended March 31,
|
||||||
Derivative Instruments
|
Gain / (Loss)
Recognized
|
|
2018
|
|
2017
|
||||
Non Qualifying Hedges
|
|
|
|
|
|
|
|
||
Interest rate swaps
|
Other income
|
|
$
|
4.0
|
|
|
$
|
2.2
|
|
Interest rate options
|
Other income
|
|
0.1
|
|
|
0.1
|
|
||
Foreign currency forward contracts
|
Other income
|
|
(29.9
|
)
|
|
(7.0
|
)
|
||
Equity warrants
|
Other income
|
|
—
|
|
|
(0.1
|
)
|
||
Total Return Swap (TRS)
|
Other income
|
|
(2.1
|
)
|
|
(0.9
|
)
|
||
Interest Rate Lock Commitments
|
Other income
|
|
—
|
|
|
0.1
|
|
||
Forward Sale Commitments on Agency MBS
|
Other income
|
|
0.2
|
|
|
(0.1
|
)
|
||
Credit Derivatives
|
Other income
|
|
(0.2
|
)
|
|
—
|
|
||
Total Non-qualifying Hedges -income statement impact
|
|
|
$
|
(27.9
|
)
|
|
$
|
(5.7
|
)
|
|
|
|
|
|
|
|
|
|
Assets and Liabilities Measured at Fair Value on a Recurring Basis
(dollars in millions)
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debt securities AFS
|
$
|
5,564.1
|
|
|
$
|
247.8
|
|
|
$
|
5,005.0
|
|
|
$
|
311.3
|
|
Securities carried at fair value with changes recorded in net income
(1)
|
44.1
|
|
|
0.2
|
|
|
43.9
|
|
|
—
|
|
||||
Derivative assets at fair value — non-qualifying hedges
(2)
|
94.2
|
|
|
—
|
|
|
94.1
|
|
|
0.1
|
|
||||
Derivative assets at fair value — qualifying hedges
(2)
|
24.5
|
|
|
—
|
|
|
24.5
|
|
|
—
|
|
||||
Total
|
$
|
5,726.9
|
|
|
$
|
248.0
|
|
|
$
|
5,167.5
|
|
|
$
|
311.4
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative liabilities at fair value — non-qualifying hedges
(2)
|
$
|
(96.7
|
)
|
|
$
|
—
|
|
|
$
|
(80.5
|
)
|
|
$
|
(16.2
|
)
|
Derivative liabilities at fair value — qualifying hedges
(2)
|
(7.2
|
)
|
|
—
|
|
|
(7.2
|
)
|
|
—
|
|
||||
Consideration holdback liability
|
(46.0
|
)
|
|
—
|
|
|
—
|
|
|
(46.0
|
)
|
||||
FDIC True-up liability
|
(65.5
|
)
|
|
—
|
|
|
—
|
|
|
(65.5
|
)
|
||||
Total
|
$
|
(215.4
|
)
|
|
$
|
—
|
|
|
$
|
(87.7
|
)
|
|
$
|
(127.7
|
)
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets
|
|
|
|
|
|
|
|
|
|||||||
Debt securities AFS
|
$
|
6,123.6
|
|
|
$
|
199.0
|
|
|
$
|
5,538.8
|
|
|
$
|
385.8
|
|
Securities carried at fair value with changes recorded in net income
|
0.4
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
||||
Equity securities AFS
|
44.7
|
|
|
0.2
|
|
|
44.5
|
|
|
—
|
|
||||
Derivative assets at fair value — non-qualifying hedges
(2)
|
68.5
|
|
|
—
|
|
|
68.4
|
|
|
0.1
|
|
||||
Derivative assets at fair value — qualifying hedges
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
||||
Total
|
$
|
6,237.4
|
|
|
$
|
199.2
|
|
|
$
|
5,651.9
|
|
|
$
|
386.3
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative liabilities at fair value — non-qualifying hedges
(2)
|
$
|
(68.3
|
)
|
|
$
|
—
|
|
|
$
|
(54.2
|
)
|
|
$
|
(14.1
|
)
|
Derivative liabilities at fair value — qualifying hedges
|
(18.7
|
)
|
|
—
|
|
|
(18.7
|
)
|
|
—
|
|
||||
Consideration holdback liability
|
(46.0
|
)
|
|
—
|
|
|
—
|
|
|
(46.0
|
)
|
||||
FDIC True-up liability
|
(65.1
|
)
|
|
—
|
|
|
—
|
|
|
(65.1
|
)
|
||||
Total
|
$
|
(198.1
|
)
|
|
$
|
—
|
|
|
$
|
(72.9
|
)
|
|
$
|
(125.2
|
)
|
(1)
|
Upon the adoption of ASU 2016-01 - Financial Instruments as of January 1, 2018, equity securities AFS were reclassified to securities carried at fair value with changes recorded in net income. See Note 1 - Business and Summary of Significant Accounting Policies.
|
(2)
|
Derivative fair values include accrued interest.
|
|
(1)
|
The valuation of these derivatives is primarily related to the GSI facilities and 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.
|
|
▪
|
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.
|
▪
|
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.
|
▪
|
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.
|
▪
|
Default rate
— is an estimate of the likelihood of not collecting contractual amounts owed expressed as a constant default rate.
|
▪
|
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.
|
▪
|
Loss severity
— is the percentage of contractual cash flows lost in the event of a default.
|
▪
|
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”).
|
▪
|
Payment Probability
— is an estimate of the likelihood the consideration holdback amount will be required to be paid expressed as a percentage.
|
▪
|
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
|
|
Derivative
Assets-
Non-
qualifying
(1)
|
|
Derivative
Liabilities-
Non-
qualifying
(2)
|
|
FDIC
True-up
Liability
|
|
Consideration
Holdback
Liability
|
||||||||||||
December 31, 2017
|
$
|
385.8
|
|
|
$
|
0.4
|
|
|
$
|
0.1
|
|
|
$
|
(14.1
|
)
|
|
$
|
(65.1
|
)
|
|
$
|
(46.0
|
)
|
Included in earnings
|
3.5
|
|
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
|
(0.4
|
)
|
|
—
|
|
||||||
Included in comprehensive income
|
(2.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Sales, paydowns, and adjustments
|
(75.3
|
)
|
|
(0.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance as of March 31, 2018
|
$
|
311.3
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
(16.2
|
)
|
|
$
|
(65.5
|
)
|
|
$
|
(46.0
|
)
|
December 31, 2016
|
$
|
485.5
|
|
|
$
|
283.5
|
|
|
$
|
—
|
|
|
$
|
(11.5
|
)
|
|
$
|
(61.9
|
)
|
|
$
|
(47.2
|
)
|
Included in earnings
|
(1.7
|
)
|
|
3.2
|
|
|
0.1
|
|
|
(0.8
|
)
|
|
(1.1
|
)
|
|
(0.2
|
)
|
||||||
Included in comprehensive income
|
6.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Impairment
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Sales, paydowns, and adjustments
|
(20.1
|
)
|
|
(17.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance as of March 31, 2017
|
$
|
470.5
|
|
|
$
|
268.9
|
|
|
$
|
0.1
|
|
|
$
|
(12.3
|
)
|
|
$
|
(63.0
|
)
|
|
$
|
(47.4
|
)
|
(1)
|
Valuation of Interest Rate Lock Commitments
|
(2)
|
Valuation of the derivatives related to the TRS Transactions and written options on certain CIT Bank CDs.
|
|
|
|
Fair Value Measurements at Reporting Date Using:
|
|
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
(Losses)
|
||||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Assets held for sale
|
$
|
153.6
|
|
|
$
|
—
|
|
|
$
|
2.5
|
|
|
$
|
151.1
|
|
|
$
|
(0.4
|
)
|
Other real estate owned
|
13.2
|
|
|
—
|
|
|
—
|
|
|
13.2
|
|
|
(0.5
|
)
|
|||||
Impaired loans
(1)
|
37.6
|
|
|
—
|
|
|
—
|
|
|
37.6
|
|
|
(35.3
|
)
|
|||||
Total
|
$
|
204.4
|
|
|
$
|
—
|
|
|
$
|
2.5
|
|
|
$
|
201.9
|
|
|
$
|
(36.2
|
)
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Assets held for sale
|
177.8
|
|
|
—
|
|
|
—
|
|
|
177.8
|
|
|
(15.0
|
)
|
|||||
Other real estate owned
|
18.8
|
|
|
—
|
|
|
—
|
|
|
18.8
|
|
|
(4.4
|
)
|
|||||
Impaired loans
|
89.1
|
|
|
—
|
|
|
—
|
|
|
89.1
|
|
|
(21.9
|
)
|
|||||
Total
|
$
|
285.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
285.7
|
|
|
$
|
(41.3
|
)
|
(1)
|
In the current quarter there was a $
22 million
charge-off of a single Commercial Finance exposure.
|
|
|
|
|
|
Estimated Fair Value
|
|
|
||||||||||||||
|
Carrying
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and interest bearing deposits
|
$
|
4,096.3
|
|
|
$
|
4,096.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,096.3
|
|
Derivative assets at fair value — non-qualifying hedges
|
94.2
|
|
|
—
|
|
|
94.1
|
|
|
0.1
|
|
|
94.2
|
|
|||||
Derivative assets at fair value — qualifying hedges
|
24.5
|
|
|
—
|
|
|
24.5
|
|
|
—
|
|
|
24.5
|
|
|||||
Assets held for sale (excluding leases)
|
980.2
|
|
|
—
|
|
|
3.6
|
|
|
1,011.5
|
|
|
1,015.1
|
|
|||||
Loans (excluding leases)
|
26,828.4
|
|
|
|
|
|
668.8
|
|
|
26,495.2
|
|
|
27,164.0
|
|
|||||
Securities purchased under agreement to resell
|
250.0
|
|
|
—
|
|
|
250.0
|
|
|
—
|
|
|
250.0
|
|
|||||
Investment securities
(1)
|
5,910.5
|
|
|
248.0
|
|
|
5,048.9
|
|
|
613.6
|
|
|
5,910.5
|
|
|||||
Indemnification assets
(2)
|
91.6
|
|
|
—
|
|
|
—
|
|
|
72.2
|
|
|
72.2
|
|
|||||
Other assets subject to fair value disclosure and unsecured counterparty receivables
(3)
|
476.2
|
|
|
—
|
|
|
—
|
|
|
476.2
|
|
|
476.2
|
|
|||||
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Deposits
(4)
|
(30,616.7
|
)
|
|
—
|
|
|
—
|
|
|
(30,638.8
|
)
|
|
(30,638.8
|
)
|
|||||
Derivative liabilities at fair value — non-qualifying hedges
|
(96.7
|
)
|
|
—
|
|
|
(80.5
|
)
|
|
(16.2
|
)
|
|
(96.7
|
)
|
|||||
Derivative liabilities at fair value — qualifying hedges
|
(7.2
|
)
|
|
—
|
|
|
(7.2
|
)
|
|
—
|
|
|
(7.2
|
)
|
|||||
Borrowings
(4)
|
(10,480.9
|
)
|
|
—
|
|
|
(9,711.9
|
)
|
|
(943.1
|
)
|
|
(10,655.0
|
)
|
|||||
Credit balances of factoring clients
|
(1,549.0
|
)
|
|
—
|
|
|
—
|
|
|
(1,549.0
|
)
|
|
(1,549.0
|
)
|
|||||
Other liabilities subject to fair value disclosure
(5)
|
(613.7
|
)
|
|
—
|
|
|
—
|
|
|
(613.7
|
)
|
|
(613.7
|
)
|
|||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and interest bearing deposits
|
$
|
1,718.7
|
|
|
$
|
1,718.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,718.7
|
|
Derivative assets at fair value — non-qualifying hedges
|
68.5
|
|
|
—
|
|
|
68.4
|
|
|
0.1
|
|
|
68.5
|
|
|||||
Derivative assets at fair value — qualifying hedges
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|||||
Assets held for sale (excluding leases)
|
1,011.4
|
|
|
—
|
|
|
4.7
|
|
|
1,044.8
|
|
|
1,049.5
|
|
|||||
Loans (excluding leases)
|
26,428.1
|
|
|
—
|
|
|
624.3
|
|
|
26,220.5
|
|
|
26,844.8
|
|
|||||
Securities purchased under agreement to resell
|
150.0
|
|
|
—
|
|
|
150.0
|
|
|
—
|
|
|
150.0
|
|
|||||
Investment securities
(1)
|
6,469.9
|
|
|
199.2
|
|
|
5,583.3
|
|
|
687.4
|
|
|
6,469.9
|
|
|||||
Indemnification assets
(2)
|
113.5
|
|
|
—
|
|
|
—
|
|
|
87.4
|
|
|
87.4
|
|
|||||
Other assets subject to fair value disclosure and unsecured counterparty receivables
(3)
|
542.2
|
|
|
—
|
|
|
—
|
|
|
542.2
|
|
|
542.2
|
|
|||||
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Deposits
(4)
|
(29,586.5
|
)
|
|
—
|
|
|
—
|
|
|
(29,668.6
|
)
|
|
(29,668.6
|
)
|
|||||
Derivative liabilities at fair value — non-qualifying hedges
|
(68.3
|
)
|
|
—
|
|
|
(54.2
|
)
|
|
(14.1
|
)
|
|
(68.3
|
)
|
|||||
Derivative liabilities at fair value — qualifying hedges
|
(18.7
|
)
|
|
—
|
|
|
(18.7
|
)
|
|
—
|
|
|
(18.7
|
)
|
|||||
Borrowings
(4)
|
(9,043.8
|
)
|
|
—
|
|
|
(8,281.7
|
)
|
|
(991.2
|
)
|
|
(9,272.9
|
)
|
|||||
Credit balances of factoring clients
|
(1,468.6
|
)
|
|
—
|
|
|
—
|
|
|
(1,468.6
|
)
|
|
(1,468.6
|
)
|
|||||
Other liabilities subject to fair value disclosure
(5)
|
(725.2
|
)
|
|
—
|
|
|
—
|
|
|
(725.2
|
)
|
|
(725.2
|
)
|
(1)
|
Level 3 estimated fair value at
March 31, 2018
, includes debt securities AFS (
$311.3 million
), and non-marketable investments (
$302.3 million
). Level 3 estimated fair value at December 31, 2017 included debt securities AFS (
$385.8 million
), debt securities carried at fair value with changes recorded in net income (
$0.4 million
), and non-marketable investments (
$301.2 million
).
|
(2)
|
The indemnification assets included in the above table do not include Agency claims indemnification (
$28.9 million
at both
March 31, 2018
and December 31, 2017, respectively), 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 their 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.
|
|
▪
|
Commercial and Consumer Loans
— Of the loan balance above, $
668.8 million
and
$624.3 million
at
March 31, 2018
and
December 31, 2017
, respectively, were valued using Level 2 inputs. As there is no liquid secondary market for the other loans in the Company’s portfolio, the fair value is estimated based on analyses which use Level 3 inputs at both
March 31, 2018
and
December 31, 2017
. In addition to the characteristics of the underlying contracts, key inputs to the analysis include interest rates, prepayment rates, To Be Announced ("TBA") prices, 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 March 31, 2018 was
$27.2 billion
, which was
101.3%
of carrying value. The fair value of loans at
December 31, 2017
was
$26.8 billion
, which was
101.6%
of carrying value.
|
▪
|
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
March 31, 2018
, the UPB related to impaired loans totaled
$237.9 million
. Including related allowances, these loans are carried at
$158.9 million
, or
66.8%
of UPB. Of these amounts,
$149.7 million
and
$101.5 million
of UPB and carrying value, respectively, relate to loans with no specific allowance. As of December 31, 2017 the UPB related to impaired loans totaled $
195.5 million
. Including related allowances, these loans were carried at $
146.7 million
, or
75.0%
of UPB. Of these amounts, $
86.1 million
and $
63.6 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.
|
▪
|
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.
|
|
▪
|
Unsecured debt
— Unsecured debt includes both senior debt and subordinated debt. Approximately
$5.2 billion
par value at
March 31, 2018
and
$3.8 billion
at
December 31, 2017
were valued using market inputs, which are Level 2 inputs.
|
▪
|
Secured borrowings
— Secured borrowings include both structured financings and FHLB Advances. Approximately
$4.4 billion
par value at
March 31, 2018
and
$4.3 billion
par value at
December 31, 2017
, were valued using market inputs, which are Level 2 inputs. Where market estimates were not available for approximately
$1.0 billion
par value at both
March 31, 2018
, and
December 31, 2017
, 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, which is based on the discounted cash flow model. The cash flows are calculated using the contractual features of the advance and they are discounted using observable rates. As the inputs for the calculation are observable and the model does not require significant judgment, FHLB advances are classified as Level 2.
|
Number of Shares of Common Stock
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
|
Issued
|
|
Less
Treasury |
|
Outstanding
|
|||
Common Stock – December 31, 2017
|
|
207,628,491
|
|
|
(76,275,567
|
)
|
|
131,352,924
|
|
Restricted stock issued
|
|
1,188,303
|
|
|
—
|
|
|
1,188,303
|
|
Repurchase of common stock
|
|
—
|
|
|
(3,665,866
|
)
|
|
(3,665,866
|
)
|
Shares held to cover taxes on vesting restricted shares and other
|
|
—
|
|
|
(470,681
|
)
|
|
(470,681
|
)
|
Employee stock purchase plan participation
|
|
13,603
|
|
|
—
|
|
|
13,603
|
|
Common Stock – March 31, 2018
|
|
208,830,397
|
|
|
(80,412,114
|
)
|
|
128,418,283
|
|
|
|
|
|
|
|
|
Changes in Accumulated Other Comprehensive Income (Loss) by Component
(dollars in millions)
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
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, 2017
|
$
|
(8.0
|
)
|
|
$
|
(54.5
|
)
|
|
$
|
(24.0
|
)
|
|
$
|
(86.5
|
)
|
Adoption of ASUs 2016-01 and 2018-02
(1)
|
3.3
|
|
|
0.3
|
|
|
(4.1
|
)
|
|
(0.5
|
)
|
||||
AOCI activity before reclassifications
|
(2.4
|
)
|
|
3.3
|
|
|
(60.1
|
)
|
|
(59.2
|
)
|
||||
Amounts reclassified from AOCI
|
—
|
|
|
0.1
|
|
|
(3.8
|
)
|
|
(3.7
|
)
|
||||
Net current period AOCI
|
(2.4
|
)
|
|
3.4
|
|
|
(63.9
|
)
|
|
(62.9
|
)
|
||||
Balance as of March 31, 2018
|
$
|
(7.1
|
)
|
|
$
|
(50.8
|
)
|
|
$
|
(92.0
|
)
|
|
$
|
(149.9
|
)
|
Balance as of December 31, 2016
|
$
|
(61.4
|
)
|
|
$
|
(65.3
|
)
|
|
$
|
(13.4
|
)
|
|
$
|
(140.1
|
)
|
AOCI activity before reclassifications
|
3.3
|
|
|
0.9
|
|
|
2.7
|
|
|
6.9
|
|
||||
Amounts reclassified from AOCI
|
9.5
|
|
|
—
|
|
|
—
|
|
|
9.5
|
|
||||
Net current period AOCI
|
12.8
|
|
|
0.9
|
|
|
2.7
|
|
|
16.4
|
|
||||
Balance as of March 31, 2017
|
$
|
(48.6
|
)
|
|
$
|
(64.4
|
)
|
|
$
|
(10.7
|
)
|
|
$
|
(123.7
|
)
|
Capital Components and Ratios
(dollars in millions)
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
CIT
|
|
CIT Bank, N.A.
|
||||||||||||
|
March 31,
2018 |
|
December 31,
2017 |
|
March 31,
2018 |
|
December 31,
2017 |
||||||||
Common Equity Tier 1 Capital
|
$
|
6,321.5
|
|
|
$
|
6,479.8
|
|
|
$
|
4,730.9
|
|
|
$
|
4,751.6
|
|
Tier 1 Capital
|
$
|
6,637.7
|
|
|
$
|
6,775.4
|
|
|
$
|
4,730.9
|
|
|
$
|
4,751.6
|
|
Total Capital
|
$
|
7,528.2
|
|
|
$
|
7,251.0
|
|
|
$
|
5,165.5
|
|
|
$
|
5,183.3
|
|
Risk-Weighted Assets
|
$
|
44,777.8
|
|
|
$
|
44,537.7
|
|
|
$
|
34,742.2
|
|
|
$
|
34,527.2
|
|
Capital Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Common Equity Tier 1 Capital Ratio:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Actual
|
14.1
|
%
|
|
14.5
|
%
|
|
13.6
|
%
|
|
13.8
|
%
|
||||
Effective minimum ratios under Basel III guidelines
(1)
|
6.375
|
%
|
|
5.750
|
%
|
|
6.375
|
%
|
|
5.750
|
%
|
||||
Tier 1 Capital Ratio:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Actual
|
14.8
|
%
|
|
15.2
|
%
|
|
13.6
|
%
|
|
13.8
|
%
|
||||
Effective minimum ratios under Basel III guidelines
(1)
|
7.875
|
%
|
|
7.250
|
%
|
|
7.875
|
%
|
|
7.250
|
%
|
||||
Total Capital Ratio:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Actual
|
16.8
|
%
|
|
16.3
|
%
|
|
14.9
|
%
|
|
15.0
|
%
|
||||
Effective minimum ratios under Basel III guidelines
(1)
|
9.875
|
%
|
|
9.250
|
%
|
|
9.875
|
%
|
|
9.250
|
%
|
||||
Tier 1 Leverage Ratio:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Actual
|
13.5
|
%
|
|
13.8
|
%
|
|
11.6
|
%
|
|
11.8
|
%
|
||||
Required minimum ratio for capital adequacy purposes
|
4.0
|
%
|
|
4.0
|
%
|
|
4.0
|
%
|
|
4.0
|
%
|
|
Commitments
(dollars in millions)
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
March 31, 2018
|
|
|
||||||||||||
|
Due to Expire
|
|
December 31,
2017 |
||||||||||||
|
Within
One Year
|
|
After
One Year
|
|
Total
Outstanding
|
|
Total
Outstanding
|
||||||||
Financing Commitments
|
|
|
|
|
|
|
|
|
|
|
|
||||
Financing assets
(1) (2)
|
$
|
2,018.1
|
|
|
$
|
4,689.7
|
|
|
$
|
6,707.8
|
|
|
$
|
6,351.1
|
|
Letters of credit
|
|
|
|
|
|
|
|
|
|
|
|
||||
Standby letters of credit
|
31.8
|
|
|
212.8
|
|
|
244.6
|
|
|
213.3
|
|
||||
Other letters of credit
|
14.3
|
|
|
—
|
|
|
14.3
|
|
|
14.2
|
|
||||
Guarantees
|
|
|
|
|
|
|
|
|
|||||||
Deferred purchase agreements
|
1,870.6
|
|
|
—
|
|
|
1,870.6
|
|
|
2,068.1
|
|
||||
Guarantees, acceptances and other recourse obligations
|
2.1
|
|
|
—
|
|
|
2.1
|
|
|
2.1
|
|
||||
Purchase and Funding Commitments
|
|
|
|
|
|
|
|
|
|
|
|
||||
Rail and other purchase commitments
(1)
|
252.9
|
|
|
27.5
|
|
|
280.4
|
|
|
222.9
|
|
|
Commercial
Banking
|
|
Consumer
Banking
|
|
Non-Strategic
Portfolios
|
|
Corporate
and Other
|
|
Total CIT
|
||||||||||
Quarter Ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest income
|
$
|
314.9
|
|
|
$
|
85.2
|
|
|
$
|
2.4
|
|
|
$
|
48.7
|
|
|
$
|
451.2
|
|
Interest expense (benefit)
|
156.3
|
|
|
(24.3
|
)
|
|
1.7
|
|
|
46.8
|
|
|
180.5
|
|
|||||
Provision for credit losses
|
67.2
|
|
|
1.6
|
|
|
—
|
|
|
—
|
|
|
68.8
|
|
|||||
Rental income on operating leases
|
253.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
253.6
|
|
|||||
Other non-interest income
|
78.0
|
|
|
11.5
|
|
|
1.2
|
|
|
14.0
|
|
|
104.7
|
|
|||||
Depreciation on operating lease equipment
|
76.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
76.4
|
|
|||||
Maintenance and other operating lease expenses
|
57.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57.4
|
|
|||||
Operating expenses / loss on debt extinguishment and deposit redemption
|
183.1
|
|
|
96.0
|
|
|
2.2
|
|
|
0.1
|
|
|
281.4
|
|
|||||
Income (loss) from continuing operations before provision (benefit) for income taxes
|
$
|
106.1
|
|
|
$
|
23.4
|
|
|
$
|
(0.3
|
)
|
|
$
|
15.8
|
|
|
$
|
145.0
|
|
Select Period End Balances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loans
|
$
|
23,345.9
|
|
|
$
|
6,107.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29,453.6
|
|
Credit balances of factoring clients
|
1,549.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,549.0
|
|
|||||
Assets held for sale
|
1,376.3
|
|
|
864.0
|
|
|
58.5
|
|
|
—
|
|
|
2,298.8
|
|
|||||
Operating lease equipment, net
|
6,774.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,774.9
|
|
|||||
Quarter Ended March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest income
|
$
|
307.5
|
|
|
$
|
100.0
|
|
|
$
|
7.0
|
|
|
$
|
41.2
|
|
|
$
|
455.7
|
|
Interest expense (benefit)
|
119.8
|
|
|
(6.5
|
)
|
|
5.0
|
|
|
44.8
|
|
|
163.1
|
|
|||||
Provision for credit losses
|
49.2
|
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|
49.7
|
|
|||||
Rental income on operating leases
|
251.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
251.3
|
|
|||||
Other non-interest income
|
72.3
|
|
|
7.9
|
|
|
(2.9
|
)
|
|
1.8
|
|
|
79.1
|
|
|||||
Depreciation on operating lease equipment
|
73.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
73.5
|
|
|||||
Maintenance and other operating lease expenses
|
53.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
53.8
|
|
|||||
Operating expenses / loss on debt extinguishment
|
178.7
|
|
|
95.6
|
|
|
2.0
|
|
|
35.3
|
|
|
311.6
|
|
|||||
Income (loss) from continuing operations before provision (benefit) for income taxes
|
$
|
156.1
|
|
|
$
|
18.3
|
|
|
$
|
(2.9
|
)
|
|
$
|
(37.1
|
)
|
|
$
|
134.4
|
|
Select Period End Balances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loans
|
$
|
22,878.6
|
|
|
$
|
6,812.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29,691.4
|
|
Credit balances of factoring clients
|
1,547.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,547.1
|
|
|||||
Assets held for sale
|
336.4
|
|
|
64.1
|
|
|
162.1
|
|
|
—
|
|
|
562.6
|
|
|||||
Operating lease equipment, net
|
7,516.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,516.2
|
|
|
Results of Operations
(dollars in millions)
|
|||||||||||
|
|
||||||||||
|
Quarters Ended
|
||||||||||
GAAP Results
|
March 31, 2018
|
|
December 31, 2017
|
|
March 31, 2017
|
||||||
Income (loss) from continuing operations available to common shareholders
|
$
|
103.7
|
|
|
$
|
(92.6
|
)
|
|
$
|
78.2
|
|
Income (loss) from discontinued operations, net of taxes
|
(6.7
|
)
|
|
(5.2
|
)
|
|
101.7
|
|
|||
Net income (loss) available to common shareholders
|
$
|
97.0
|
|
|
$
|
(97.8
|
)
|
|
$
|
179.9
|
|
Diluted income per common share
|
|
|
|
|
|
||||||
Income (loss) from continuing operations available to common shareholders
|
$
|
0.79
|
|
|
$
|
(0.70
|
)
|
|
$
|
0.38
|
|
Income (loss) from discontinued operations, net of taxes
|
(0.05
|
)
|
|
(0.04
|
)
|
|
0.50
|
|
|||
Diluted income (loss) per common share available to common shareholders
|
$
|
0.74
|
|
|
$
|
(0.74
|
)
|
|
$
|
0.88
|
|
Average number of common shares — diluted (thousands)
|
131,588
|
|
|
131,343
|
|
|
203,348
|
|
|||
|
|
|
|
|
|
||||||
Non-GAAP Results, excluding noteworthy items
|
|
|
|
|
|
||||||
Income from continuing operations available to common shareholders
|
$
|
96.9
|
|
|
$
|
130.3
|
|
|
$
|
109.4
|
|
(Loss) income from discontinued operations, net of taxes
|
(6.7
|
)
|
|
(5.2
|
)
|
|
53.7
|
|
|||
Net income available to common shareholders
|
$
|
90.2
|
|
|
$
|
125.1
|
|
|
$
|
163.1
|
|
Diluted income per common share
|
|
|
|
|
|
||||||
Income from continuing operations available to common shareholders
|
$
|
0.74
|
|
|
$
|
0.99
|
|
|
$
|
0.54
|
|
(Loss) income from discontinued operations, net of taxes
|
(0.05
|
)
|
|
(0.04
|
)
|
|
0.26
|
|
|||
Diluted income per common share available to common shareholders
|
$
|
0.69
|
|
|
$
|
0.95
|
|
|
$
|
0.80
|
|
Average number of common shares — diluted (thousands)
|
131,588
|
|
|
131,343
|
|
|
203,348
|
|
1.
Income from continuing operations excluding noteworthy items and other non-interest income excluding noteworthy items are non-GAAP measures; see “Non-GAAP Financial Measurements” for a reconciliation of non-GAAP to GAAP financial information.
|
|
2
Net income excluding noteworthy items is a non-GAAP measure; see “Non-GAAP Financial Measurements” for a reconciliation of non-GAAP to GAAP financial information.
|
|
(1)
|
The average balances presented are derived based on month end balances during the year. Tax exempt income was not significant in any of the periods presented. 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.
|
3
Net finance revenue, net finance margin, net operating lease revenue and average earnings assets, and respective amounts excluding noteworthy items are non-GAAP measures. See “Non-GAAP Measurements” for reconciliation of non-GAAP to GAAP financial information.
|
Average Funding Mix
|
||||||||
|
Quarters Ended
|
|||||||
|
March 31,
2018 |
|
December 31,
2017 |
|
March 31,
2017 |
|||
Deposits
|
77
|
%
|
|
77
|
%
|
|
69
|
%
|
Unsecured
|
10
|
%
|
|
10
|
%
|
|
22
|
%
|
Secured Borrowings:
|
|
|
|
|
|
|||
Structured financings
|
4
|
%
|
|
4
|
%
|
|
4
|
%
|
FHLB Advances
|
9
|
%
|
|
9
|
%
|
|
5
|
%
|
4
Net finance revenue, net finance margin, net operating lease revenue and average earnings assets, and respective amounts excluding noteworthy items are non-GAAP measures. See “Non-GAAP Measurements” for reconciliation of non-GAAP to GAAP financial information.
|
Interest-Bearing Deposits and Borrowings — Average Balances and Rates for the Quarters Ended
(dollars in millions)
|
||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
March 31, 2018
|
|
December 31, 2017
|
|
March 31, 2017
|
|||||||||||||||||||||||||||
|
Average
Balance |
|
Interest
Expense |
|
Rate %
|
|
Average
Balance |
|
Interest
Expense |
|
Rate %
|
|
Average
Balance |
|
Interest
Expense |
|
Rate %
|
|||||||||||||||
Interest-bearing Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Time deposits
|
$
|
14,140.2
|
|
|
$
|
59.8
|
|
|
1.69
|
%
|
|
$
|
14,449.8
|
|
|
$
|
61.2
|
|
|
1.69
|
%
|
|
$
|
16,454.2
|
|
|
$
|
64.3
|
|
|
1.56
|
%
|
Interest-bearing checking
|
2,658.7
|
|
|
4.1
|
|
|
0.62
|
%
|
|
2,637.8
|
|
|
3.7
|
|
|
0.56
|
%
|
|
3,197.0
|
|
|
4.4
|
|
|
0.55
|
%
|
||||||
Savings
|
6,512.1
|
|
|
21.1
|
|
|
1.30
|
%
|
|
6,003.6
|
|
|
16.8
|
|
|
1.12
|
%
|
|
4,499.7
|
|
|
10.7
|
|
|
0.95
|
%
|
||||||
Money markets / sweeps
|
5,284.2
|
|
|
12.1
|
|
|
0.92
|
%
|
|
5,042.5
|
|
|
10.4
|
|
|
0.82
|
%
|
|
6,802.1
|
|
|
14.6
|
|
|
0.86
|
%
|
||||||
Total interest-bearing deposits
|
28,595.2
|
|
|
97.1
|
|
|
1.36
|
%
|
|
28,133.7
|
|
|
92.1
|
|
|
1.31
|
%
|
|
30,953.0
|
|
|
94.0
|
|
|
1.21
|
%
|
||||||
Borrowings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Unsecured notes
(1)
|
4,092.3
|
|
|
51.0
|
|
|
4.98
|
%
|
|
3,745.9
|
|
|
46.7
|
|
|
4.99
|
%
|
|
10,599.8
|
|
|
136.8
|
|
|
5.16
|
%
|
||||||
Secured borrowings
|
1,756.5
|
|
|
16.4
|
|
|
3.73
|
%
|
|
1,881.3
|
|
|
16.3
|
|
|
3.47
|
%
|
|
2,948.9
|
|
|
27.0
|
|
|
3.66
|
%
|
||||||
FHLB advances
|
3,454.1
|
|
|
15.0
|
|
|
1.74
|
%
|
|
3,283.0
|
|
|
11.9
|
|
|
1.45
|
%
|
|
2,410.7
|
|
|
6.4
|
|
|
1.06
|
%
|
||||||
Other credit facilities
(2)
|
—
|
|
|
4.1
|
|
|
—
|
%
|
|
—
|
|
|
5.0
|
|
|
—
|
%
|
|
—
|
|
|
(2.7
|
)
|
|
—
|
%
|
||||||
Total borrowings
|
9,302.9
|
|
|
86.5
|
|
|
3.72
|
%
|
|
8,910.2
|
|
|
79.9
|
|
|
3.59
|
%
|
|
15,959.4
|
|
|
167.5
|
|
|
4.20
|
%
|
||||||
Allocated to discontinued operations
|
(257.5
|
)
|
|
(3.1
|
)
|
|
|
|
|
(279.1
|
)
|
|
(3.3
|
)
|
|
|
|
|
(1,144.4
|
)
|
|
(98.4
|
)
|
|
|
|
||||||
Total borrowings
|
9,045.4
|
|
|
83.4
|
|
|
3.69
|
%
|
|
8,631.1
|
|
|
76.6
|
|
|
3.55
|
%
|
|
14,815.0
|
|
|
69.1
|
|
|
1.87
|
%
|
||||||
Total interest-bearing liabilities
|
$
|
37,640.6
|
|
|
$
|
180.5
|
|
|
1.92
|
%
|
|
$
|
36,764.8
|
|
|
$
|
168.7
|
|
|
1.84
|
%
|
|
$
|
45,768.0
|
|
|
$
|
163.1
|
|
|
1.43
|
%
|
(1)
|
The March 31, 2018 quarter includes amounts applicable to $1.0 billion of senior unsecured debt and $400 million of unsecured subordinated debt issued during the quarter.
|
(2)
|
Balance includes interest expense related to facility fees and amortization of deferred costs on unused portions of credit facilities, including the Revolving Credit Facility and total return swaps. Amount for the quarter ended March 31, 2017, was reduced by capitalized interest on aircraft pre-delivery deposits and included in the amount allocated to discontinued operations.
|
Purchase Accounting Accretion (PAA)
(dollars in millions)
|
|||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Quarters Ended
|
||||||||||||||||||||||||||||||||||
|
March 31, 2018
|
|
December 31, 2017
|
|
March 31, 2017
|
||||||||||||||||||||||||||||||
|
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
|
$
|
4.0
|
|
|
$
|
0.1
|
|
|
$
|
4.1
|
|
|
$
|
7.8
|
|
|
$
|
0.2
|
|
|
$
|
8.0
|
|
|
$
|
12.2
|
|
|
$
|
0.3
|
|
|
$
|
12.5
|
|
Real Estate Finance
|
6.6
|
|
|
—
|
|
|
6.6
|
|
|
7.9
|
|
|
—
|
|
|
7.9
|
|
|
11.9
|
|
|
—
|
|
|
11.9
|
|
|||||||||
Total Commercial Banking
|
10.6
|
|
|
0.1
|
|
|
10.7
|
|
|
15.7
|
|
|
0.2
|
|
|
15.9
|
|
|
24.1
|
|
|
0.3
|
|
|
24.4
|
|
|||||||||
Consumer Banking
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Other Consumer Banking
|
0.1
|
|
|
0.8
|
|
|
0.9
|
|
|
0.1
|
|
|
0.9
|
|
|
1.0
|
|
|
(0.4
|
)
|
|
1.2
|
|
|
0.8
|
|
|||||||||
Legacy Consumer Mortgages
(3)
|
21.0
|
|
|
—
|
|
|
21.0
|
|
|
23.0
|
|
|
—
|
|
|
23.0
|
|
|
30.7
|
|
|
—
|
|
|
30.7
|
|
|||||||||
Total Consumer Banking
|
21.1
|
|
|
0.8
|
|
|
21.9
|
|
|
23.1
|
|
|
0.9
|
|
|
24.0
|
|
|
30.3
|
|
|
1.2
|
|
|
31.5
|
|
|||||||||
Corporate and Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.2
|
|
|||||||||
Total CIT
|
$
|
31.7
|
|
|
$
|
0.9
|
|
|
$
|
32.6
|
|
|
$
|
38.8
|
|
|
$
|
1.1
|
|
|
$
|
39.9
|
|
|
$
|
54.4
|
|
|
$
|
1.7
|
|
|
$
|
56.1
|
|
(1)
|
Included in the above are accelerated recognition of approximately $
7.1
million, $
12.1
million and $
14.2
million for the quarters ended
March 31, 2018
and
2017
and
December 31, 2017
, respectively.
|
(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.
|
(3)
|
The decline from the year-ago quarter reflects the transfer of the reverse mortgage portfolio to AHFS at the end of the third quarter of 2017.
|
|
Allowance for Loan Losses
(dollars in millions)
|
|||||||||||
|
|
|
|
|
|
||||||
|
Quarters Ended
|
||||||||||
|
March 31,
2018 |
|
December 31,
2017 |
|
March 31,
2017 |
||||||
Allowance — beginning of period
|
$
|
431.1
|
|
|
$
|
419.5
|
|
|
$
|
432.6
|
|
Provision for credit losses
(1)
|
68.8
|
|
|
30.4
|
|
|
49.7
|
|
|||
Other
(1)
|
(2.4
|
)
|
|
(0.5
|
)
|
|
(6.2
|
)
|
|||
Net additions
|
66.4
|
|
|
29.9
|
|
|
43.5
|
|
|||
Gross charge-offs
|
(55.1
|
)
|
|
(23.3
|
)
|
|
(33.0
|
)
|
|||
Recoveries
|
5.2
|
|
|
5.0
|
|
|
5.5
|
|
|||
Net Charge-offs
|
(49.9
|
)
|
|
(18.3
|
)
|
|
(27.5
|
)
|
|||
Allowance — end of period
|
$
|
447.6
|
|
|
$
|
431.1
|
|
|
$
|
448.6
|
|
Provision for credit losses
|
|||||||||||
Specific reserves on impaired loans
|
$
|
(0.7
|
)
|
|
$
|
(9.6
|
)
|
|
$
|
9.6
|
|
Non-specific reserves
|
69.5
|
|
|
40.0
|
|
|
40.1
|
|
|||
Total
|
$
|
68.8
|
|
|
$
|
30.4
|
|
|
$
|
49.7
|
|
Allowance for loan losses
|
|||||||||||
Specific reserves on impaired loans
|
$
|
25.3
|
|
|
$
|
26.0
|
|
|
$
|
39.5
|
|
Non-specific reserves
|
422.3
|
|
|
405.1
|
|
|
409.1
|
|
|||
Total
|
$
|
447.6
|
|
|
$
|
431.1
|
|
|
$
|
448.6
|
|
Ratio
|
|||||||||||
Allowance for loan losses as a percentage of total loans
|
1.52
|
%
|
|
1.48
|
%
|
|
1.51
|
%
|
|||
Allowance for loan losses as a percent of loans/Commercial
|
1.79
|
%
|
|
1.74
|
%
|
|
1.85
|
%
|
(1)
|
The provision for credit losses includes amounts related to reserves on unfunded loan commitments and letters of credit, and for deferred purchase agreements, which are reflected in other liabilities. The items included in other liabilities totaled
$47 million
,
$45 million
and
$50 million
at
March 31, 2018
,
December 31, 2017
and
March 31, 2017
, respectively. “Other” also includes allowance for loan losses associated with loan sales and foreign currency translations.
|
Loan Net Carrying Value
(dollars in millions)
|
|||||||||||
|
Loans
|
|
Allowance
for Loan Losses |
|
Net Carrying
Value |
||||||
March 31, 2018
|
|||||||||||
Commercial Banking
|
$
|
23,345.9
|
|
|
$
|
(417.2
|
)
|
|
$
|
22,928.7
|
|
Consumer Banking
|
6,107.7
|
|
|
(30.4
|
)
|
|
6,077.3
|
|
|||
Total
|
$
|
29,453.6
|
|
|
$
|
(447.6
|
)
|
|
$
|
29,006.0
|
|
December 31, 2017
|
|||||||||||
Commercial Banking
|
$
|
23,159.3
|
|
|
$
|
(402.2
|
)
|
|
$
|
22,757.1
|
|
Consumer Banking
|
5,954.6
|
|
|
(28.9
|
)
|
|
5,925.7
|
|
|||
Total
|
$
|
29,113.9
|
|
|
$
|
(431.1
|
)
|
|
$
|
28,682.8
|
|
Non-accrual Loans
(dollars in millions)
(1)
|
|||||||
|
|
|
|
||||
|
March 31,
2018 |
|
December 31,
2017 |
||||
Non-accrual loans
|
|||||||
U.S.
|
$
|
212.8
|
|
|
$
|
211.1
|
|
Foreign
|
23.7
|
|
|
9.8
|
|
||
Non-accrual loans
|
$
|
236.5
|
|
|
$
|
220.9
|
|
Troubled Debt Restructurings
(2)
|
|||||||
U.S.
|
$
|
94.4
|
|
|
$
|
103.5
|
|
Restructured loans
|
$
|
94.4
|
|
|
$
|
103.5
|
|
Accruing loans past due 90 days or more
|
|||||||
Accruing loans past due 90 days or more
|
$
|
27.0
|
|
|
$
|
31.9
|
|
(1)
|
Factored receivables within our Business Capital division do not accrue interest and therefore are not considered within non-accrual loan balances but are considered for credit provisioning purposes.
|
(2)
|
Excludes TDR loans in a trial modification period of
$7.9 million
and $12.5 million at
March 31, 2018
and
December 31, 2017
, respectively. Refer to Note 3 — Loans for further details.
|
TDRs and Modifications
(dollars in millions)
|
|||||||||||||
|
|
|
|
|
|
|
|
||||||
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||
|
|
|
% Compliant
|
|
|
|
% Compliant
|
||||||
Troubled Debt Restructurings
(1)
|
|||||||||||||
Deferral of principal and/or interest
|
$
|
25.5
|
|
|
81
|
%
|
|
$
|
31.8
|
|
|
95
|
%
|
Covenant relief and other
|
68.9
|
|
|
78
|
%
|
|
71.7
|
|
|
70
|
%
|
||
Total TDRs
|
$
|
94.4
|
|
|
79
|
%
|
|
$
|
103.5
|
|
|
78
|
%
|
Percent non-accrual
|
61
|
%
|
|
|
|
|
63
|
%
|
|
|
|
||
Modifications
(2)
|
|
|
|
|
|
|
|
||||||
Extended maturity
|
$
|
30.0
|
|
|
100
|
%
|
|
$
|
35.7
|
|
|
100
|
%
|
Covenant relief
|
223.0
|
|
|
95
|
%
|
|
260.2
|
|
|
100
|
%
|
||
Interest rate increase
|
154.3
|
|
|
100
|
%
|
|
102.8
|
|
|
100
|
%
|
||
Other
|
332.2
|
|
|
98
|
%
|
|
229.5
|
|
|
90
|
%
|
||
Total Modifications
|
$
|
739.5
|
|
|
|
|
|
$
|
628.2
|
|
|
|
|
Percent non-accrual
|
10
|
%
|
|
|
|
|
8
|
%
|
|
|
(1)
|
Excludes TDR loans in a trial modification period of
$7.9 million
and $12.5 million at
March 31, 2018
and
December 31, 2017
, respectively. See Note 3 — Loans for further details.
|
(2)
|
Table depicts the predominant element of each modification, which may contain several of the characteristics listed.
|
|
Non-interest Income
(dollars in millions)
|
|||||||||||
|
Quarters Ended
|
||||||||||
|
March 31,
2018 |
|
December 31,
2017 |
|
March 31,
2017 |
||||||
Rental income on operating leases
|
$
|
253.6
|
|
|
$
|
252.6
|
|
|
$
|
251.3
|
|
Other non-interest income:
|
|
|
|
|
|
||||||
Fee revenues
|
27.2
|
|
|
30.3
|
|
|
28.9
|
|
|||
Factoring commissions
|
25.6
|
|
|
26.7
|
|
|
26.1
|
|
|||
Gains on leasing equipment, net of impairments
|
13.5
|
|
|
7.9
|
|
|
6.9
|
|
|||
BOLI Income
|
6.5
|
|
|
5.8
|
|
|
—
|
|
|||
Gains on investment securities, net of impairments
|
5.4
|
|
|
12.4
|
|
|
4.1
|
|
|||
Other revenues
|
26.5
|
|
|
54.1
|
|
|
13.1
|
|
|||
Total other non-interest income
|
104.7
|
|
|
137.2
|
|
|
79.1
|
|
|||
Total other non-interest income, excluding noteworthy items
(1)
|
$
|
104.7
|
|
|
$
|
107.8
|
|
|
$
|
87.2
|
|
Total non-interest income
|
$
|
358.3
|
|
|
$
|
389.8
|
|
|
$
|
330.4
|
|
|
|
|
|
|
|
||||||
(1)
Total non-interest income, excluding noteworthy items
are non-GAAP balances, see reconciliations to GAAP balance in
Non-GAAP Financial Measurements.
|
|
Non-Interest Expense
(dollars in millions)
|
|||||||||||
|
|
|
|
|
|
||||||
|
Quarters Ended
|
||||||||||
|
March 31,
2018 |
|
December 31,
2017 |
|
March 31,
2017 |
||||||
Depreciation on operating lease equipment
|
$
|
76.4
|
|
|
$
|
74.3
|
|
|
$
|
73.5
|
|
Maintenance and other operating lease expenses
|
57.4
|
|
|
57.9
|
|
|
53.8
|
|
|||
Operating expenses:
|
|||||||||||
Compensation and benefits
|
147.8
|
|
|
138.6
|
|
|
143.3
|
|
|||
Technology
|
32.4
|
|
|
30.7
|
|
|
32.7
|
|
|||
Professional fees
|
25.8
|
|
|
28.8
|
|
|
39.8
|
|
|||
Insurance
|
19.9
|
|
|
15.7
|
|
|
25.6
|
|
|||
Net occupancy expense
|
16.2
|
|
|
16.7
|
|
|
19.9
|
|
|||
Advertising and marketing
|
13.0
|
|
|
12.8
|
|
|
5.4
|
|
|||
Other expenses
|
20.2
|
|
|
22.7
|
|
|
23.9
|
|
|||
Operating expenses, excluding restructuring costs and intangible asset amortization
|
275.3
|
|
|
266.0
|
|
|
290.6
|
|
|||
Intangible asset amortization
|
6.0
|
|
|
6.1
|
|
|
6.2
|
|
|||
Restructuring costs
|
—
|
|
|
31.9
|
|
|
14.8
|
|
|||
Total operating expenses
|
281.3
|
|
|
304.0
|
|
|
311.6
|
|
|||
Goodwill impairment
|
—
|
|
|
255.6
|
|
|
—
|
|
|||
Loss on debt extinguishment and deposit redemption
|
0.1
|
|
|
1.7
|
|
|
—
|
|
|||
Total non-interest expenses
|
$
|
415.2
|
|
|
$
|
693.5
|
|
|
$
|
438.9
|
|
Headcount
|
3,898
|
|
|
3,909
|
|
|
4,058
|
|
|||
Operating expenses excluding restructuring costs and intangible asset amortization as a % of AEA
(1)
|
2.43
|
%
|
|
2.39
|
%
|
|
2.49
|
%
|
|||
Net efficiency ratio
(2)
|
55.6
|
%
|
|
49.6
|
%
|
|
58.6
|
%
|
|||
Net Efficiency Ratio excluding noteworthy items
(2)
|
56.7
|
%
|
|
53.4
|
%
|
|
57.7
|
%
|
(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 and net efficiency ratio adjusted are non-GAAP measurements 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 and description of the calculation.
|
•
|
Compensation and benefits
increased from the prior quarter mostly reflecting the restart of annual benefit costs. Compared to the year-ago quarter, higher costs were partially offset by the impact of fewer employees.
|
•
|
Technology
costs increased from the prior quarter due to higher software expenses.
|
•
|
Professional fees
included legal and other professional fees, such as tax, audit, and consulting services. The decline from the year-ago quarter was driven by lower audit fees, while the declines from both the year-ago and prior quarters reflect lower consulting costs for CCAR reporting, partially offset by higher litigation costs.
|
•
|
Insurance
expenses, while below the year-ago level on lower FDIC premium assessment, was up from the prior quarter, which benefited from a true-up of the FDIC insurance costs.
|
•
|
Net Occupancy
expenses were down from the year-ago quarter, driven by lower rent, building repairs, and relocation costs.
|
•
|
Advertising and marketing
expenses include costs associated with raising deposits and may fluctuate based on timing of marketing programs. A consumer promotional marketing campaign started after the 2017 first quarter.
|
•
|
Intangible asset amortization
primarily results from intangible assets recorded in the OneWest Bank acquisition.
|
•
|
Restructuring costs
were significant in the year-ago and prior quarters, as we continued strategic initiatives to reduce operating expenses and streamline our operations, which resulted in employee reductions compared to the year-ago period.
|
•
|
Other
expenses
include items such as travel and entertainment, office equipment and supplies and taxes (other than income taxes, etc.), and from time to time includes settlement agreement costs, including OneWest Bank legacy matters.
|
|
Income Tax Data
(dollars in millions)
|
|||||||||||
|
|
|
|
|
|
||||||
|
Quarters Ended
|
||||||||||
|
March 31, 2018
|
|
December 31, 2017
|
|
March 31, 2017
|
||||||
Provision for income taxes, before discrete items
|
$
|
39.6
|
|
|
$
|
45.4
|
|
|
$
|
44.9
|
|
Discrete items
|
1.7
|
|
|
(17.7
|
)
|
|
11.3
|
|
|||
Provision (benefit) for income taxes
|
$
|
41.3
|
|
|
$
|
27.7
|
|
|
$
|
56.2
|
|
Effective tax rate
|
28.5
|
%
|
|
(50.3
|
)%
|
|
41.8
|
%
|
|||
Effective tax rate, before tax discrete items and noteworthy items
(1)
|
27.3
|
%
|
|
39.4
|
%
|
|
31.9
|
%
|
(1)
|
Effective tax rate excluding discrete items or noteworthy items are non-GAAP measures. See “Non-GAAP Measurements” for reconciliation of non-GAAP financial information.
|
•
|
$4.0 million deferred income tax benefit resulting from the release of a valuation allowance on deferred tax assets established on the capital losses generated in the prior year from an equity investment in a wholly-owned foreign subsidiary,
|
•
|
$3.7 million net deferred income tax expense, which includes $5.3 million deferred income tax expense resulting from revaluation of U.S. state deferred tax assets and liabilities as a result of state tax rate changes, partially offset by $1.6 million of net tax benefits from various other U.S. federal, state, and international discrete tax items,
|
•
|
$2.0 million deferred income tax expense related to the increase to the deferred tax liability on the Company’s investment in NACCO, which is categorized as “held for sale.”
|
•
|
$37.1 million deferred income tax benefit resulting from the release of a valuation allowance on deferred tax assets established on the capital losses generated from an equity investment in a wholly-owned foreign subsidiary,
|
•
|
$26.6 million income tax expense related to the cumulative effect adjustment for the Company’s election to change the accounting policy for LIHTC investments from the equity method to the proportional amortization method. The total income tax expense of $38.2 million disclosed within Management’s Discussion and Analysis “Non-GAAP Financial Measurements” section includes an $11.6 million tax effect of the $29 million pretax item recorded in other non-interest income,
|
•
|
$11.6 million net deferred tax benefit was recognized from the effect of the enacted U.S. tax reform legislation which included the following:
|
•
|
$13.6 million deferred income tax benefit related to the reduction of deferred tax liabilities on previously untaxed earnings and profits (“E&P”) due to provisions in the U.S. Tax Reform that imposes a one-time “Toll Tax” on unremitted net positive E&P. This tax converts the net positive E&P into “previously taxed income” that can be repatriated without any further tax. The Company has a net deficit in E&P and, accordingly, has no Toll Tax liability,
|
•
|
$4.9 million expense reported on the income tax expense line for an increase in amortization expense resulting from revaluation of the LIHTC investments,
|
•
|
$2.9 million deferred income tax benefit related to revaluation of the U.S. deferred tax assets and liabilities as a result of change in U.S federal tax rates from 35% to 21% with an effective date of January 1, 2018, and
|
•
|
$1.1 million net deferred tax expense related to the recognition of NACCO related items including impact of French tax law changes of an $11.0 million deferred tax benefit and adjustments to deferred taxes on the Company’s investment in NACCO of $12.0 million deferred tax expense, which is now categorized as “held for sale,”
|
•
|
$3.3 million of miscellaneous net tax expense items.
|
•
|
$13.9 million in deferred tax expense related to the restructuring of legal entities in preparation for the Commercial Air sale,
|
•
|
$2.9 million in deferred tax benefit related to the revaluation of deferred taxes from state tax rate changes, and
|
•
|
$0.3 million of miscellaneous net tax expense items.
|
|
|
Quarters Ended
|
||||||||||
Earnings Summary
|
March 31,
2018 |
|
December 31,
2017 |
|
March 31,
2017 |
||||||
Interest income
|
$
|
314.9
|
|
|
$
|
314.5
|
|
|
$
|
307.5
|
|
Rental income on operating leases
|
253.6
|
|
|
252.6
|
|
|
251.3
|
|
|||
Finance revenue
|
568.5
|
|
|
567.1
|
|
|
558.8
|
|
|||
Interest expense
|
156.3
|
|
|
138.8
|
|
|
119.8
|
|
|||
Depreciation on operating lease equipment
|
76.4
|
|
|
74.3
|
|
|
73.5
|
|
|||
Maintenance and other operating lease expenses
|
57.4
|
|
|
57.9
|
|
|
53.8
|
|
|||
Net finance revenue (NFR)
|
278.4
|
|
|
296.1
|
|
|
311.7
|
|
|||
Provision for credit losses
|
67.2
|
|
|
28.6
|
|
|
49.2
|
|
|||
Other non-interest income
|
78.0
|
|
|
73.0
|
|
|
72.3
|
|
|||
Operating expenses
|
183.1
|
|
|
167.9
|
|
|
178.7
|
|
|||
Goodwill impairment
|
—
|
|
|
255.6
|
|
|
—
|
|
|||
Income (loss) before income taxes
|
$
|
106.1
|
|
|
$
|
(83.0
|
)
|
|
$
|
156.1
|
|
Select Period End Balance
|
|||||||||||
Loans and leases
|
$
|
31,497.1
|
|
|
$
|
31,232.4
|
|
|
$
|
30,731.2
|
|
Earning assets (net of credit balances of factoring clients)
|
30,193.7
|
|
|
30,039.0
|
|
|
29,428.8
|
|
|||
Select Average Balances
|
|||||||||||
Average loans (includes HFS, and net of credit balances)
|
$
|
21,813.6
|
|
|
$
|
21,420.2
|
|
|
$
|
21,549.9
|
|
Average operating leases (AOL)* (includes HFS)
|
7,934.6
|
|
|
7,841.0
|
|
|
7,500.9
|
|
|||
Average earning assets (AEA)
|
30,021.7
|
|
|
29,507.3
|
|
|
29,304.7
|
|
|||
Statistical Data
|
|||||||||||
Net finance margin - NFR as a % of AEA
|
3.71
|
%
|
|
4.01
|
%
|
|
4.25
|
%
|
|||
Net operating lease revenue — rental income, net of depreciation and maintenance and other operating lease expenses*
|
$
|
119.8
|
|
|
$
|
120.4
|
|
|
$
|
124.0
|
|
Operating lease margin as a % of AOL*
|
6.04
|
%
|
|
6.14
|
%
|
|
6.61
|
%
|
|||
Net efficiency ratio
|
51.0
|
%
|
|
45.1
|
%
|
|
46.1
|
%
|
|||
Pretax return on AEA
|
1.41
|
%
|
|
(1.13
|
)%
|
|
2.13
|
%
|
|||
New business volume
|
$
|
2,267.2
|
|
|
$
|
2,902.0
|
|
|
$
|
1,615.4
|
|
Factoring volume
|
$
|
7,426.0
|
|
|
$
|
7,731.2
|
|
|
$
|
6,811.6
|
|
▪
|
Net finance revenue ("NFR") decreased from both the year-ago and prior quarters. The decreases were primarily driven by higher interest expense, reflecting increases in interest rates and growth in the portfolio, as well as lower purchase accounting accretion and prepayment benefits in Commercial Finance and Real Estate Finance and lower net rental income in Rail. The decreases were partially offset by the benefit of higher interest rates on earning assets. Compared to the year-ago quarter, the decrease was partially offset by the suspended depreciation related to NACCO.
|
▪
|
Net Finance Margin ("NFM") was down compared to the year-ago and prior quarters, reflecting the impact of lower NFR as discussed above and slightly higher average earning assets which were 2% higher compared to both the prior and year-ago quarters.
|
▪
|
Purchase accounting accretion totaled
$11 million
,
$16 million
and
$24 million
in the current, prior and year-ago quarters, respectively, and continues to trend down. Essentially all accretion benefited interest income, with a small amount decreasing interest expense. (Purchase accounting accretion is depicted in tabular form in the
Net Finance Revenue
section). The current quarter, prior and year-ago quarters included
$4 million
,
$8 million
and
$10 million
, respectively, of PAA that was accelerated due to prepayments.
|
▪
|
Gross yields (interest income plus rental income on operating leases as a % of AEA) in Commercial Banking were down from the year-ago and prior quarters. The declines reflect continued pressure on rail as discussed below. The Commercial Finance increase in gross yields from the year-ago quarter was primarily driven by the benefit of higher short-term interest rates, partially offset by a decline in PAA, which also drove the division’s decrease from the prior quarter. See Select Segment and Division Margin Metrics table in
Net Finance Revenue
section for amounts of purchase accounting accretion and gross yields by division.
|
▪
|
Net operating lease revenue, which is a component of NFR, is driven primarily by the performance of our rail portfolio. Rail’s net rental income decline, excluding the suspension of depreciation expense related to NACCO, from both the year-ago and prior quarters were mainly driven by renewal rates that continue to price lower due to excess capacity in the market. We expect renewal rates to continue to be below expiring rates through 2018 and into 2019. This re-pricing will fluctuate depending on the number and types of cars renewing during any given quarter. Suspended depreciation on operating lease equipment in assets held for sale totaled about $9 million for the current and prior quarters, with no suspended depreciation in the year-ago quarter. Excluding the suspended depreciation, the current and prior quarter operating lease margin would have declined to
5.57%
and
5.69%
, respectively. Railcar utilization, including commitments to lease, was up at
97%
from 95% at December 31, 2017.
|
▪
|
Other non-interest income increased from the year-ago quarter and prior quarter, reflecting the following:
|
▪
|
Factoring commissions of
$26 million
were down compared to the year-ago quarter, despite an increase in factoring volumes, as a change in the portfolio mix put downward pressure on pricing, and down from the prior quarter, reflecting the seasonal decrease in volume.
|
▪
|
Gains on asset sales (including receivables, equipment and investments), net of impairments, totaled
$17 million
, compared to
$14 million
in the year-ago quarter and
$12 million
in the prior quarter. The gains for the quarters were primarily driven by sales of rail cars.
|
▪
|
Fee revenue is mainly driven by fees on lines of credit and letters of credit, capital markets-related fees, agent and advisory fees and banking related fees, including cash management and account fees. Fee revenue was
$25 million
in the current quarter, down from
$27 million
in the year-ago quarter and
$28 million
in the prior quarter, on lower capital market fees.
|
▪
|
The provision for credit losses in the current quarter totaled
$67 million
, compared to
$49 million
in the year-ago quarter and
$29 million
in the prior quarter. The increase in the provision this quarter reflected a $22 million charge-off of a single commercial exposure and a higher level of reserves primarily within the Commercial Finance division.
|
▪
|
Net charge-offs were
$50 million
(
0.86%
of average loans),
$27 million
(
0.48%
) in the year-ago quarter and
$18.0 million
(
0.32%
) in the prior quarter. The increases were driven by the noted charge-off of a single credit.
|
▪
|
Non-accrual loans were
$199 million
(
0.85%
of loans), compared to
$191 million
(
0.82%
) at
December 31, 2017
, and
$234 million
(
1.02%
) at March 31, 2017. The decrease from the year-ago quarter was in the Commercial Finance and Business Capital divisions.
|
▪
|
Operating expenses increased from the year-ago and prior quarters, both reflecting higher legal fees in Rail and higher employee costs.
|
|
Quarters Ended
|
||||||||||
Earnings Summary
|
March 31,
2018 |
|
December 31,
2017 |
|
March 31,
2017 |
||||||
Interest income
|
$
|
85.2
|
|
|
$
|
84.3
|
|
|
$
|
100.0
|
|
Interest benefit
|
(24.3
|
)
|
|
(19.7
|
)
|
|
(6.5
|
)
|
|||
Net finance revenue (NFR)
|
109.5
|
|
|
104.0
|
|
|
106.5
|
|
|||
Provision for credit losses
|
1.6
|
|
|
1.8
|
|
|
0.5
|
|
|||
Other non-interest income
|
11.5
|
|
|
13.2
|
|
|
7.9
|
|
|||
Operating expenses
|
96.0
|
|
|
103.5
|
|
|
95.6
|
|
|||
Income before income taxes
|
$
|
23.4
|
|
|
$
|
11.9
|
|
|
$
|
18.3
|
|
Select Period End Balance
|
|||||||||||
Loans (includes HFS)
|
$
|
6,971.7
|
|
|
$
|
6,820.2
|
|
|
$
|
6,876.9
|
|
Earning assets
|
7,092.2
|
|
|
6,962.6
|
|
|
7,190.0
|
|
|||
Deposits
|
24,915.4
|
|
|
23,421.8
|
|
|
22,584.1
|
|
|||
Select Average Balances
|
|||||||||||
Average loans (includes HFS)
|
$
|
6,878.8
|
|
|
$
|
6,728.0
|
|
|
$
|
6,963.9
|
|
Average earning assets (AEA)
|
7,009.4
|
|
|
6,885.6
|
|
|
7,291.8
|
|
|||
Statistical Data
|
|||||||||||
Net finance margin - NFR as a % of AEA
|
6.25
|
%
|
|
6.04
|
%
|
|
5.84
|
%
|
|||
Net efficiency ratio
|
75.5
|
%
|
|
84.4
|
%
|
|
79.5
|
%
|
|||
Pretax return on AEA
|
1.34
|
%
|
|
0.69
|
%
|
|
1.00
|
%
|
|||
New business volume
|
$
|
388.6
|
|
|
$
|
421.9
|
|
|
$
|
154.7
|
|
▪
|
NFR of
$110 million
increased slightly compared to the year-ago quarter, as higher negative income (see
Net Finance Revenue
MD&A section) related to amortizing the indemnification asset for the covered loans and lower interest income due to suspended purchase accounting accretion from the held for sale reverse mortgage portfolio was offset by an increase in the benefit in interest expense received from the other segments for the value of the excess deposits Consumer Banking generates. NFR increased from the prior quarter primarily due to an increase in the benefit in interest expense received from the other segments for the value of the excess deposits Consumer Banking generates. Net finance margin reflected similar trends. There was approximately
$22 million
(including $3 million accelerated) of PAA in the current quarter, compared to
$32 million
(including $2 million accelerated) in the year-ago quarter and
$24 million
(including $4 million accelerated) in the prior quarter.
|
▪
|
Other non-interest income included gains and (losses) on asset sales, net of impairments, fee revenue and other miscellaneous income. Other non-interest income increased $4 million compared to the year-ago quarter due to an increase in gains on asset sales from the reverse mortgage portfolio. Other non-interest income decreased by $2 million compared to the prior quarter primarily due to a decline in gains on asset sales.
|
▪
|
Non-accrual loans were
$26 million
(
0.42%
of loans) at
March 31, 2018
, up from
$20 million
(
0.34%
) at
December 31, 2017
, and
$16 million
(
0.24%
) at March 31, 2017, essentially all of which are in LCM.
|
▪
|
Operating expenses are proportionally higher than other segments, which causes the net efficiency ratio to be higher than other segments, reflecting the branch operations and advertising and marketing campaigns for deposits. Operating expenses declined compared to the prior quarter primarily driven by lower servicing-related costs. Compared to the year-ago quarter, operating expenses were unchanged.
|
|
Quarters Ended
|
||||||||||
Earnings Summary
|
March 31,
2018 |
|
December 31,
2017 |
|
March 31,
2017 |
||||||
Interest income
|
$
|
2.4
|
|
|
$
|
5.1
|
|
|
$
|
7.0
|
|
Finance revenue
|
2.4
|
|
|
5.1
|
|
|
7.0
|
|
|||
Interest expense
|
1.7
|
|
|
2.2
|
|
|
5.0
|
|
|||
Net finance revenue (NFR)
|
0.7
|
|
|
2.9
|
|
|
2.0
|
|
|||
Other non-interest income
|
1.2
|
|
|
0.9
|
|
|
(2.9
|
)
|
|||
Operating expenses
|
2.2
|
|
|
(0.3
|
)
|
|
2.0
|
|
|||
(Loss) income before income taxes
|
$
|
(0.3
|
)
|
|
$
|
4.1
|
|
|
$
|
(2.9
|
)
|
Select Period End Balance
|
|||||||||||
Loans and leases
|
$
|
58.5
|
|
|
$
|
63.3
|
|
|
$
|
162.1
|
|
Earning assets
|
151.3
|
|
|
145.3
|
|
|
348.2
|
|
|||
Select Average Balances
|
|||||||||||
Average earning assets (AEA)
|
148.6
|
|
|
188.0
|
|
|
367.5
|
|
|||
Statistical Data
|
|||||||||||
Net finance margin — NFR as a % of AEA
|
1.88
|
%
|
|
6.17
|
%
|
|
2.18
|
%
|
|||
Pretax return on AEA
|
(0.81
|
)%
|
|
8.72
|
%
|
|
(3.16
|
)%
|
|
Quarters Ended
|
||||||||||
Earnings Summary
|
March 31,
2018 |
|
December 31,
2017 |
|
March 31,
2017 |
||||||
Interest income
|
$
|
48.7
|
|
|
$
|
43.8
|
|
|
$
|
41.2
|
|
Interest expense
|
46.8
|
|
|
47.4
|
|
|
44.8
|
|
|||
Net finance revenue (NFR)
|
1.9
|
|
|
(3.6
|
)
|
|
(3.6
|
)
|
|||
Other non-interest income
|
14.0
|
|
|
50.1
|
|
|
1.8
|
|
|||
Operating expenses - Including gain/ (loss) on debt extinguishment
|
0.1
|
|
|
34.6
|
|
|
35.3
|
|
|||
Income (loss) before benefit for income taxes
|
$
|
15.8
|
|
|
$
|
11.9
|
|
|
$
|
(37.1
|
)
|
Select Balances
|
|||||||||||
Average earning assets
|
$
|
8,085.4
|
|
|
$
|
7,981.2
|
|
|
$
|
9,674.9
|
|
Earning assets (end of period)
|
$
|
9,717.5
|
|
|
$
|
7,702.8
|
|
|
$
|
9,460.7
|
|
•
|
A number of noteworthy items related to our strategic initiatives impact this division in the year-ago and prior quarters, which include an accounting policy change for LIHTC investments and restructuring costs. In total, these amounts reduced pretax income by $15 million in the year-ago quarter and $3 million in the prior quarter.
|
•
|
Interest income consists of interest and dividend income, primarily from investment securities and cash deposited at other financial institutions, and has increased as we shift from cash to securities in the investment portfolio. See the Net Finance Revenue section that displays an average balance sheet and the respective income.
|
•
|
Interest expense in Corporate represents amounts in excess of expenses allocated to segments and amounts related to excess liquidity.
|
•
|
Other non-interest income primarily reflects BOLI income, gains and (losses) on derivatives and foreign currency exchange, and mark to market adjustments on certain MBS securities carried at fair value. Compared to the year-ago quarter, the increase is driven by BOLI income of $7 million. The prior quarter benefited from $29 million related to the cumulative effect of an accounting policy change for LIHTC investments.
|
•
|
In the current period, the operating expenses were fully allocated to the segments. There were no restructuring costs in the current quarter, compared to
$15 million
in the year-ago quarter and
$32 million
in the prior quarter.
|
|
Loans and Leases Composition
(dollars in millions)
|
|||||||
|
|
|
|
||||
|
March 31, 2018
|
|
December 31, 2017
|
||||
Commercial Banking
|
|
|
|
||||
Commercial Finance
|
|
|
|
||||
Loans
|
$
|
9,926.1
|
|
|
$
|
9,928.8
|
|
Assets held for sale
|
88.1
|
|
|
123.5
|
|
||
Total loans and leases
|
10,014.2
|
|
|
10,052.3
|
|
||
Rail
|
|
|
|
||||
Loans
|
81.5
|
|
|
82.8
|
|
||
Operating lease equipment, net
|
6,268.4
|
|
|
6,260.9
|
|
||
Assets held for sale
|
1,256.5
|
|
|
1,188.5
|
|
||
Total loans and leases
|
7,606.4
|
|
|
7,532.2
|
|
||
Real Estate Finance
|
|
|
|
||||
Loans
|
5,594.5
|
|
|
5,567.9
|
|
||
Assets held for sale
|
28.0
|
|
|
22.3
|
|
||
Total loans and leases
|
5,622.5
|
|
|
5,590.2
|
|
||
Business Capital
|
|
|
|
||||
Loans
|
7,743.8
|
|
|
7,579.8
|
|
||
Operating lease equipment, net
|
506.5
|
|
|
478.0
|
|
||
Assets held for sale
|
3.7
|
|
|
—
|
|
||
Total loans and leases
|
8,254.0
|
|
|
8,057.8
|
|
||
Total Segment - Commercial Banking
|
|
|
|
||||
Loans
|
23,345.9
|
|
|
23,159.3
|
|
||
Operating lease equipment, net
|
6,774.9
|
|
|
6,738.9
|
|
||
Assets held for sale
|
1,376.3
|
|
|
1,334.2
|
|
||
Total loans and leases
|
31,497.1
|
|
|
31,232.4
|
|
||
Consumer Banking
|
|
|
|
||||
Legacy Consumer Mortgages
|
|
|
|
||||
Loans
|
3,203.0
|
|
|
3,331.1
|
|
||
Assets held for sale
|
860.5
|
|
|
861.0
|
|
||
Total loans
|
4,063.5
|
|
|
4,192.1
|
|
||
Other Consumer Banking
|
|
|
|
||||
Loans
|
2,904.7
|
|
|
2,623.5
|
|
||
Assets held for sale
|
3.5
|
|
|
4.6
|
|
||
Total loans
|
2,908.2
|
|
|
2,628.1
|
|
||
Total Segment - Consumer Banking
|
|
|
|
||||
Loans
|
6,107.7
|
|
|
5,954.6
|
|
||
Assets held for sale
|
864.0
|
|
|
865.6
|
|
||
Total loans
|
6,971.7
|
|
|
6,820.2
|
|
||
Non-Strategic Portfolios
|
|
|
|
||||
Assets held for sale
|
58.5
|
|
|
63.3
|
|
||
Total loans and leases
|
58.5
|
|
|
63.3
|
|
||
|
|
|
|
||||
Total Loans
|
$
|
29,453.6
|
|
|
$
|
29,113.9
|
|
Total operating lease equipment, net
|
6,774.9
|
|
|
6,738.9
|
|
||
Total assets held for sale
|
2,298.8
|
|
|
2,263.1
|
|
||
Total loans and leases
|
$
|
38,527.3
|
|
|
$
|
38,115.9
|
|
Loan and Portfolio Sales
(dollars in millions)
|
|||||||||||
|
|
|
|
|
|
||||||
|
Quarters Ended
|
||||||||||
|
March 31,
2018 |
|
December 31,
2017 |
|
March 31,
2017 |
||||||
Commercial Banking
|
$
|
79.1
|
|
|
$
|
38.8
|
|
|
$
|
126.9
|
|
Consumer Banking
|
19.0
|
|
|
26.8
|
|
|
44.9
|
|
|||
Total
|
$
|
98.1
|
|
|
$
|
65.6
|
|
|
$
|
171.8
|
|
Equipment Sales
(dollars in millions)
|
|||||||||||
|
|
|
|
|
|
||||||
|
Quarters Ended
|
||||||||||
|
March 31,
2018 |
|
December 31,
2017 |
|
March 31,
2017 |
||||||
Commercial Banking
|
$
|
46.5
|
|
|
$
|
57.3
|
|
|
$
|
33.0
|
|
Non-Strategic Portfolios
|
0.2
|
|
|
2.3
|
|
|
17.9
|
|
|||
Total
|
$
|
46.7
|
|
|
$
|
59.6
|
|
|
$
|
50.9
|
|
|
Total Loans and Leases by Geographic Region
(dollars in millions)
|
|||||||||||||
|
|
|
|
|
|
|
|
||||||
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||
West
|
$
|
12,121.2
|
|
|
31.5
|
%
|
|
$
|
12,009.8
|
|
|
31.5
|
%
|
Northeast
|
9,671.8
|
|
|
25.1
|
%
|
|
9,658.7
|
|
|
25.3
|
%
|
||
Midwest
|
4,669.1
|
|
|
12.1
|
%
|
|
4,641.1
|
|
|
12.2
|
%
|
||
Southwest
|
4,302.5
|
|
|
11.2
|
%
|
|
4,063.5
|
|
|
10.7
|
%
|
||
Southeast
|
3,469.2
|
|
|
9.0
|
%
|
|
3,346.0
|
|
|
8.8
|
%
|
||
Total U.S.
|
34,233.8
|
|
|
88.9
|
%
|
|
33,719.1
|
|
|
88.5
|
%
|
||
Europe
|
1,491.6
|
|
|
3.9
|
%
|
|
1,444.1
|
|
|
3.8
|
%
|
||
Canada
|
1,231.8
|
|
|
3.2
|
%
|
|
1,326.4
|
|
|
3.4
|
%
|
||
Asia / Pacific
|
631.3
|
|
|
1.6
|
%
|
|
720.8
|
|
|
1.9
|
%
|
||
All other countries
|
938.8
|
|
|
2.4
|
%
|
|
905.5
|
|
|
2.4
|
%
|
||
Total
|
$
|
38,527.3
|
|
|
100.0
|
%
|
|
$
|
38,115.9
|
|
|
100.0
|
%
|
|
Commercial Loans and Leases by Obligor - Geographic Region
(dollars in millions)
|
|||||||||||||
|
|
|
|
||||||||||
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||
Northeast
|
$
|
8,675.5
|
|
|
27.1
|
%
|
|
$
|
8,646.1
|
|
|
27.3
|
%
|
West
|
7,317.5
|
|
|
22.9
|
%
|
|
7,349.9
|
|
|
23.2
|
%
|
||
Midwest
|
4,480.2
|
|
|
14.0
|
%
|
|
4,448.7
|
|
|
14.0
|
%
|
||
Southwest
|
4,207.1
|
|
|
13.1
|
%
|
|
3,970.2
|
|
|
12.5
|
%
|
||
Southeast
|
3,024.9
|
|
|
9.5
|
%
|
|
2,902.5
|
|
|
9.2
|
%
|
||
Total U.S.
|
27,705.2
|
|
|
86.6
|
%
|
|
27,317.4
|
|
|
86.2
|
%
|
||
Europe
|
1,491.6
|
|
|
4.7
|
%
|
|
1,444.1
|
|
|
4.5
|
%
|
||
Canada
|
1,231.8
|
|
|
3.8
|
%
|
|
1,326.4
|
|
|
4.2
|
%
|
||
Asia / Pacific
|
631.3
|
|
|
2.0
|
%
|
|
720.8
|
|
|
2.2
|
%
|
||
All other countries
|
938.8
|
|
|
2.9
|
%
|
|
905.5
|
|
|
2.9
|
%
|
||
Total
|
$
|
31,998.7
|
|
|
100.0
|
%
|
|
$
|
31,714.2
|
|
|
100.0
|
%
|
Commercial Loans and Leases by Obligor - Industry
(dollars in millions)
|
|||||||||||||
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||
Real Estate
|
$
|
5,243.7
|
|
|
16.4
|
%
|
|
$
|
5,224.8
|
|
|
16.5
|
%
|
Manufacturing
(1)
|
4,739.0
|
|
|
14.8
|
%
|
|
4,729.8
|
|
|
14.9
|
%
|
||
Retail
(2)
|
2,564.2
|
|
|
8.0
|
%
|
|
2,531.2
|
|
|
8.0
|
%
|
||
Wholesale
|
2,260.6
|
|
|
7.1
|
%
|
|
2,343.7
|
|
|
7.4
|
%
|
||
Energy and utilities
|
2,255.3
|
|
|
7.0
|
%
|
|
2,253.3
|
|
|
7.1
|
%
|
||
Rail
|
1,903.1
|
|
|
5.9
|
%
|
|
1,916.7
|
|
|
6.1
|
%
|
||
Oil and gas extraction / services
|
1,550.9
|
|
|
4.9
|
%
|
|
1,437.6
|
|
|
4.5
|
%
|
||
Service industries
|
1,534.9
|
|
|
4.8
|
%
|
|
1,464.5
|
|
|
4.6
|
%
|
||
Business Services
|
1,512.9
|
|
|
4.7
|
%
|
|
1,559.0
|
|
|
4.9
|
%
|
||
Healthcare
|
1,510.6
|
|
|
4.7
|
%
|
|
1,458.0
|
|
|
4.6
|
%
|
||
Finance and insurance
|
1,328.8
|
|
|
4.2
|
%
|
|
1,183.8
|
|
|
3.7
|
%
|
||
Maritime
|
1,290.8
|
|
|
4.0
|
%
|
|
1,341.8
|
|
|
4.2
|
%
|
||
Transportation
|
833.3
|
|
|
2.6
|
%
|
|
810.7
|
|
|
2.6
|
%
|
||
Other (no industry greater than 2%)
|
3,470.6
|
|
|
10.9
|
%
|
|
3,459.3
|
|
|
10.9
|
%
|
||
Total
|
$
|
31,998.7
|
|
|
100.0
|
%
|
|
$
|
31,714.2
|
|
|
100.0
|
%
|
(1)
|
At
March 31, 2018
, includes manufacturers of chemicals, including pharmaceuticals (4.5%), petroleum and coal, including refining (2.4%), food (1.4%), and stone, clay, glass and concrete (1.3%).
|
(2)
|
At
March 31, 2018
includes retailers of general merchandise (3.1%) and food and beverage providers (1.7%).
|
|
Consumer Loans
(dollars in millions)
|
|||||||||||||
|
|
|
|
|
|
|
|
||||||
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||
|
Net
Investment |
|
% of
Total |
|
Net
Investment |
|
% of
Total |
||||||
Single family residential
|
$
|
5,534.8
|
|
|
84.8
|
%
|
|
$
|
5,390.3
|
|
|
84.2
|
%
|
Reverse mortgage
|
860.5
|
|
|
13.2
|
%
|
|
861.0
|
|
|
13.4
|
%
|
||
Home Equity Lines of Credit
|
132.5
|
|
|
2.0
|
%
|
|
149.6
|
|
|
2.4
|
%
|
||
Other consumer
|
0.8
|
|
|
–
|
|
|
0.8
|
|
|
—
|
|
||
Total loans
|
$
|
6,528.6
|
|
|
100.0
|
%
|
|
$
|
6,401.7
|
|
|
100.0
|
%
|
(1)
|
No state or territory has a total in excess of 2%.
|
|
Other Assets
(dollars in millions)
|
|||||||
|
|
|
|
||||
|
March 31,
2018 |
|
December 31,
2017 |
||||
Tax credit investments and Investments in Unconsolidated Subsidiaries
|
$
|
228.3
|
|
|
$
|
247.6
|
|
Current and deferred federal and state tax assets
|
204.2
|
|
|
205.2
|
|
||
Counterparty receivables
|
203.6
|
|
|
241.3
|
|
||
Property, furniture and fixtures
|
178.4
|
|
|
173.9
|
|
||
Indemnification assets
|
120.5
|
|
|
142.4
|
|
||
Intangible assets
|
107.0
|
|
|
113.0
|
|
||
Other
|
535.9
|
|
|
472.1
|
|
||
Total other assets
|
$
|
1,577.9
|
|
|
$
|
1,595.5
|
|
(1)
|
Other includes executive retirement plan and deferred compensation, prepaid expenses, accrued interest and dividends, servicing advances, OREO and other miscellaneous assets.
|
Other Liabilities
(dollars in millions)
|
|||||||
|
|
|
|
||||
|
March 31,
2018 |
|
December 31,
2017 |
||||
Accrued expenses and accounts payable
|
$
|
538.4
|
|
|
$
|
584.8
|
|
Current and deferred taxes payable
|
215.1
|
|
|
204.3
|
|
||
Fair value of derivative financial instruments
|
104.3
|
|
|
87.5
|
|
||
Accrued interest payable
|
66.5
|
|
|
86.6
|
|
||
Other liabilities
|
414.6
|
|
|
473.9
|
|
||
Total other liabilities
|
$
|
1,338.9
|
|
|
$
|
1,437.1
|
|
(1)
|
Other consists of liabilities for taxes other than income, fair value of derivative financial instruments, equipment maintenance reserves, cash collateral deposits and contingent liabilities and other miscellaneous liabilities.
|
|
▪
|
Net Interest Income Sensitivity
(“NII Sensitivity”), which measures the net impact of hypothetical changes in interest rates on forecasted net interest revenue and rental income assuming a static balance sheet over a twelve month period; and
|
▪
|
Economic Value of Equity
Sensitivity
(“EVE Sensitivity"), which measures the net impact of these hypothetical changes on the value of equity by assessing the economic value of assets, liabilities and derivatives.
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||
|
+200 bps
|
|
+100 bps
|
|
–100 bps
|
|
+200 bps
|
|
+100 bps
|
|
–100 bps
|
NII Sensitivity
|
6.8%
|
|
3.5%
|
|
(3.9)%
|
|
6.1%
|
|
3.0%
|
|
(3.0)%
|
EVE Sensitivity
|
(3.4)%
|
|
(1.7)%
|
|
1.4%
|
|
(4.4)%
|
|
(2.3)%
|
|
2.3%
|
|
▪
|
A multi-year committed Revolving Credit Facility that has a total commitment of
$500 million
, of which approximately
$448 million
was available to be drawn; and
|
▪
|
Committed securitization facilities and secured bank lines totaled $2.1 billion, of which $971 million was unused at
March 31, 2018
, provided that eligible assets are available that can be funded through these facilities.
|
Deposits by Channel
(dollars in millions)
|
|||||||||||||
|
|
|
|
|
|
|
|
||||||
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||
|
Total
|
|
Percent
of Total |
|
Total
|
|
Percent
of Total |
||||||
Online
|
$
|
13,227.6
|
|
|
44
|
%
|
|
$
|
11,756.6
|
|
|
40
|
%
|
Branch
|
11,687.8
|
|
|
38
|
%
|
|
11,665.2
|
|
|
39
|
%
|
||
Brokered
|
3,442.8
|
|
|
11
|
%
|
|
3,618.3
|
|
|
12
|
%
|
||
Commercial
|
2,235.7
|
|
|
7
|
%
|
|
2,529.2
|
|
|
9
|
%
|
||
Total
|
$
|
30,593.9
|
|
|
100
|
%
|
|
$
|
29,569.3
|
|
|
100
|
%
|
Deposits
(dollars in millions)
|
|||||||||||||
|
|
|
|
|
|
|
|
||||||
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||
|
Total
|
|
Percent
of Total |
|
Total
|
|
Percent
of Total |
||||||
Checking and Savings:
|
|
|
|
|
|
|
|
|
|
|
|
||
Non-interest bearing checking
|
$
|
1,226.5
|
|
|
4
|
%
|
|
$
|
1,352.0
|
|
|
5
|
%
|
Interest bearing checking
|
2,618.4
|
|
|
9
|
%
|
|
2,653.3
|
|
|
9
|
%
|
||
Money market / Sweeps
|
6,268.5
|
|
|
20
|
%
|
|
5,075.5
|
|
|
17
|
%
|
||
Savings
|
6,226.7
|
|
|
20
|
%
|
|
5,986.7
|
|
|
20
|
%
|
||
Time deposits
|
14,089.3
|
|
|
46
|
%
|
|
14,343.8
|
|
|
49
|
%
|
||
Other
|
164.5
|
|
|
1
|
%
|
|
158.0
|
|
|
—
|
%
|
||
Total
|
$
|
30,593.9
|
|
|
100
|
%
|
|
$
|
29,569.3
|
|
|
100
|
%
|
FHLB Balances
(dollars in millions)
|
|||||||
|
|
|
|
||||
|
March 31,
2018 |
|
December 31,
2017 |
||||
Total borrowing capacity
|
$
|
5,334.2
|
|
|
$
|
5,217.8
|
|
Less:
|
|
|
|
||||
Advances
|
(3,894.5
|
)
|
|
(3,695.5
|
)
|
||
Letters of credit
|
(85.8
|
)
|
|
(87.8
|
)
|
||
Available capacity
|
$
|
1,353.9
|
|
|
$
|
1,434.5
|
|
Weighted average rate
|
2.04
|
%
|
|
1.56
|
%
|
||
Pledged assets
|
$
|
6,338.6
|
|
|
$
|
6,154.1
|
|
Ratings
|
|||||||
|
S&P
|
|
Fitch
|
|
Moody’s
|
|
DBRS
|
Last Credit Update
|
3/14/18
|
|
1/10/18
|
|
4/2/18
|
|
4/4/18
|
CIT Group Inc.
|
|
|
|
|
|
|
|
Issuer Rating
|
BB+
|
|
BB+
|
|
N/A
|
|
BB (high)
|
Long Term Senior Unsecured Debt
|
BB+
|
|
BB+
|
|
Ba2
|
|
BB (high)
|
Short Term Instruments
|
B
|
|
B
|
|
NR
|
|
R-4
|
Revolving Credit Facility Rating
|
N/A
|
|
BB+
|
|
Ba2
|
|
BBB (low)
|
Subordinated Debt
|
BB
|
|
BB
|
|
Ba2
|
|
BB
|
Non-Cumulative Perpetual Stock
|
B+
|
|
B
|
|
B1
|
|
B(high)
|
Outlook
|
Stable
|
|
Stable
|
|
Positive
|
|
Positive
|
CIT Bank, N.A.
|
|
|
|
|
|
|
|
Issuer Rating
|
BBB-
|
|
BB+
|
|
Ba2
|
|
BBB (low)
|
Deposit Rating (LT/ST)
|
N/A
|
|
BBB-/F3
|
|
Baa2/P-2
|
|
BBB (low) / R-2 (mid)
|
Outlook
|
Stable
|
|
Stable
|
|
Positive
|
|
Positive
|
Commitment Expiration for the Twelve Months Ended March 31
(dollars in millions)
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Total
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2022+
|
||||||||||||
Financing commitments
|
$
|
6,707.8
|
|
|
$
|
2,018.1
|
|
|
$
|
961.3
|
|
|
$
|
1,182.3
|
|
|
$
|
1,165.9
|
|
|
$
|
1,380.2
|
|
Rail and other purchase commitments
|
280.4
|
|
|
252.9
|
|
|
27.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Letters of credit
|
258.9
|
|
|
46.1
|
|
|
47.9
|
|
|
33.8
|
|
|
73.4
|
|
|
57.7
|
|
||||||
Deferred purchase agreements
|
1,870.6
|
|
|
1,870.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Guarantees, acceptances and other recourse obligations
|
2.1
|
|
|
2.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Liabilities for unrecognized tax benefits
(1)
|
13.2
|
|
|
1.0
|
|
|
12.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total contractual commitments
|
$
|
9,133.0
|
|
|
$
|
4,190.8
|
|
|
$
|
1,048.9
|
|
|
$
|
1,216.1
|
|
|
$
|
1,239.3
|
|
|
$
|
1,437.9
|
|
|
2018 Common Stock Dividends
|
|||
|
|
|
|
Declaration Date
|
Payment Date
|
|
Per Share
Dividend
|
January 22, 2018
|
February 23, 2018
|
|
$0.16
|
Capital Components, Risk-Weighted Assets, and Capital Ratios
(dollars in millions, except ratios)
|
||||||||||||
|
|
|
|
|
|
|
||||||
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||
|
|
Fully
Phased-in Basis (5) |
|
Transition
Basis |
|
Fully
Phased-in Basis |
||||||
Common Equity Tier 1 (CET1) Capital
|
|
|
|
|
|
|
|
|
|
|||
Total common stockholders’ equity
(1)
|
|
$
|
6,801.8
|
|
|
$
|
6,995.0
|
|
|
$
|
6,995.0
|
|
Effect of certain items in AOCI excluded from CET1 Capital
|
|
142.8
|
|
|
77.4
|
|
|
77.4
|
|
|||
Adjusted total equity
|
|
6,944.6
|
|
|
7,072.4
|
|
|
7,072.4
|
|
|||
Goodwill, net of associated deferred tax liabilities (DTLs)
(2)
|
|
(436.9
|
)
|
|
(436.0
|
)
|
|
(436.0
|
)
|
|||
Deferred tax assets (DTAs) arising from net operating loss and tax credit carryforwards
|
|
(98.9
|
)
|
|
(83.3
|
)
|
|
(104.2
|
)
|
|||
Intangible assets, net of associated DTLs
(2)
|
|
(87.3
|
)
|
|
(73.3
|
)
|
|
(91.5
|
)
|
|||
Total CET1 Capital
|
|
6,321.5
|
|
|
6,479.8
|
|
|
6,440.7
|
|
|||
Additional Tier 1 Capital
|
|
|
|
|
|
|
||||||
Preferred Stock
|
|
325.0
|
|
|
325.0
|
|
|
325.0
|
|
|||
Other Additional Tier 1 Capital deductions
(3)
|
|
(8.8
|
)
|
|
(29.4
|
)
|
|
(8.6
|
)
|
|||
Total Additional Tier 1 Capital
|
|
316.2
|
|
|
295.6
|
|
|
316.4
|
|
|||
Total Tier 1 Capital
|
|
6,637.7
|
|
|
6,775.4
|
|
|
6,757.1
|
|
|||
Tier 2 Capital
|
|
|
|
|
|
|
|
|
|
|||
Qualifying Tier 2 Capital Instruments
|
|
395.9
|
|
|
—
|
|
|
—
|
|
|||
Qualifying allowance for credit losses and other reserves
(4)
|
|
494.6
|
|
|
475.6
|
|
|
475.6
|
|
|||
Total Tier 2 Capital
|
|
890.5
|
|
|
475.6
|
|
|
475.6
|
|
|||
Total Capital
|
|
$
|
7,528.2
|
|
|
$
|
7,251.0
|
|
|
$
|
7,232.7
|
|
Risk-Weighted Assets
|
|
$
|
44,777.8
|
|
|
$
|
44,537.7
|
|
|
$
|
44,687.1
|
|
CIT Ratios
|
|
|
|
|
|
|
|
|
|
|||
CET1 Capital Ratio
|
|
14.1
|
%
|
|
14.5
|
%
|
|
14.4
|
%
|
|||
Tier 1 Capital Ratio
|
|
14.8
|
%
|
|
15.2
|
%
|
|
15.1
|
%
|
|||
Total Capital Ratio
|
|
16.8
|
%
|
|
16.3
|
%
|
|
16.2
|
%
|
|||
Tier 1 Leverage Ratio
|
|
13.5
|
%
|
|
13.8
|
%
|
|
13.8
|
%
|
|||
CIT Bank, N.A. Ratios
|
|
|
|
|
|
|
||||||
CET1 Capital Ratio
|
|
13.6
|
%
|
|
13.8
|
%
|
|
13.7
|
%
|
|||
Tier 1 Capital Ratio
|
|
13.6
|
%
|
|
13.8
|
%
|
|
13.7
|
%
|
|||
Total Capital Ratio
|
|
14.9
|
%
|
|
15.0
|
%
|
|
15.0
|
%
|
|||
Tier 1 Leverage Ratio
|
|
11.6
|
%
|
|
11.8
|
%
|
|
11.8
|
%
|
(1)
|
See Consolidated Balance Sheets for the components of Total common stockholders’ equity.
|
(2)
|
Goodwill and intangible assets deductions also reflect the portion included within assets held for sale and assets of discontinued operations.
|
(3)
|
Represents covered funds deductions required by the Volcker Rule. The balance as of December 31, 2017 also includes 20% of the deduction on DTAs arising from net operating loss and tax credit carryforwards applied to Additional Tier 1 Capital under transition basis.
|
(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)
|
At March 31, 2018, the Transition Basis and the Fully Phased-in Basis were the same, as described in the paragraphs preceding this table.
|
Risk-Weighted Assets
(dollars in millions)
|
|||||||
|
|
|
|
||||
|
March 31, 2018
|
|
December 31, 2017
|
||||
Balance sheet assets
|
$
|
51,542.5
|
|
|
$
|
49,278.7
|
|
Risk weighting adjustments to balance sheet assets
|
(12,372.3
|
)
|
|
(10,230.4
|
)
|
||
Off-Balance sheet items
|
5,607.6
|
|
|
5,489.4
|
|
||
Risk-Weighted Assets
|
$
|
44,777.8
|
|
|
$
|
44,537.7
|
|
Tangible Book Value and per Share Amounts
(dollars in millions, except per share amounts)
|
|||||||
|
|
|
|
||||
|
March 31, 2018
|
|
December 31, 2017
|
||||
Total common stockholders’ equity
|
$
|
6,801.8
|
|
|
$
|
6,995.0
|
|
Less: Goodwill
|
(369.9
|
)
|
|
(369.9
|
)
|
||
Intangible assets
|
(107.0
|
)
|
|
(113.0
|
)
|
||
Tangible book value
(1)
|
$
|
6,324.9
|
|
|
$
|
6,512.1
|
|
Book value per share
|
$
|
52.97
|
|
|
$
|
53.25
|
|
Tangible book value per share
(1)
|
$
|
49.25
|
|
|
$
|
49.58
|
|
(1)
|
Tangible book value and tangible book value per share are non-GAAP measures.
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
ASSETS:
|
|
|
|
|
|
||
Cash and deposits with banks
|
$
|
3,395.4
|
|
|
$
|
961.8
|
|
Securities purchased under agreement to resell
|
150.0
|
|
|
—
|
|
||
Investment securities
|
5,897.4
|
|
|
6,455.9
|
|
||
Assets held for sale
|
1,138.3
|
|
|
1,170.5
|
|
||
Loans
|
26,636.2
|
|
|
26,427.9
|
|
||
Allowance for loan losses
|
(418.9
|
)
|
|
(403.5
|
)
|
||
Operating lease equipment, net
|
3,803.3
|
|
|
3,765.5
|
|
||
Bank owned life insurance
|
795.1
|
|
|
788.6
|
|
||
Goodwill
|
323.1
|
|
|
323.1
|
|
||
Other assets
|
912.4
|
|
|
939.7
|
|
||
Assets of discontinued operation
|
298.7
|
|
|
317.1
|
|
||
Total Assets
|
$
|
42,931.0
|
|
|
$
|
40,746.6
|
|
LIABILITIES AND EQUITY:
|
|
|
|
|
|||
Deposits, including $1,575.9 and $475.8 deposits of affiliates at March 31, 2018 and December 31, 2017, respectively
|
$
|
32,171.1
|
|
|
$
|
30,048.8
|
|
FHLB advances
|
3,894.5
|
|
|
3,695.5
|
|
||
Borrowings
|
—
|
|
|
73.5
|
|
||
Other liabilities, including $695.8 and $570.5 payables to affiliates at March 31, 2018 and December 31, 2017, respectively
|
1,345.3
|
|
|
1,306.8
|
|
||
Liabilities of discontinued operation
|
476.5
|
|
|
500.5
|
|
||
Total Liabilities
|
37,887.4
|
|
|
35,625.1
|
|
||
Total Equity
|
5,043.6
|
|
|
5,121.5
|
|
||
Total Liabilities and Equity
|
$
|
42,931.0
|
|
|
$
|
40,746.6
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||
Common Equity Tier 1 Capital
|
13.6
|
%
|
|
13.7
|
%
|
Tier 1 Capital Ratio
|
13.6
|
%
|
|
13.7
|
%
|
Total Capital Ratio
|
14.9
|
%
|
|
15.0
|
%
|
Tier 1 Leverage ratio
|
11.6
|
%
|
|
11.8
|
%
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
Commercial Banking
|
|||||||
Commercial Finance
|
$
|
10,161.0
|
|
|
$
|
10,203.5
|
|
Real Estate Finance
|
5,622.5
|
|
|
5,590.2
|
|
||
Business Capital
|
5,495.1
|
|
|
5,429.9
|
|
||
Rail
|
3,327.5
|
|
|
3,320.1
|
|
||
Total
|
24,606.1
|
|
|
24,543.7
|
|
||
Consumer Banking
|
|||||||
Legacy Consumer Mortgages
|
4,063.5
|
|
|
4,192.1
|
|
||
Other Consumer Banking
|
2,908.2
|
|
|
2,628.1
|
|
||
Total
|
6,971.7
|
|
|
6,820.2
|
|
||
Total loans and leases, including assets held for sale
|
$
|
31,577.8
|
|
|
$
|
31,363.9
|
|
|
Quarters Ended
|
||||||||||
|
March 31,
2018 |
|
December 31,
2017 |
|
March 31,
2017 |
||||||
Interest income
|
$
|
428.0
|
|
|
$
|
421.1
|
|
|
$
|
429.0
|
|
Interest expense
|
120.1
|
|
|
110.2
|
|
|
105.1
|
|
|||
Net interest revenue
|
307.9
|
|
|
310.9
|
|
|
323.9
|
|
|||
Provision for credit losses
|
67.4
|
|
|
33.6
|
|
|
28.7
|
|
|||
Net interest revenue, after credit provision
|
240.5
|
|
|
277.3
|
|
|
295.2
|
|
|||
Rental income on operating leases
|
114.0
|
|
|
112.0
|
|
|
108.3
|
|
|||
Other non-interest income
|
71.1
|
|
|
118.5
|
|
|
77.1
|
|
|||
Total net revenue, net of interest expense and credit provision
|
425.6
|
|
|
507.8
|
|
|
480.6
|
|
|||
Goodwill Impairment
|
—
|
|
|
167.8
|
|
|
—
|
|
|||
Operating expenses
|
239.2
|
|
|
269.3
|
|
|
260.7
|
|
|||
Depreciation on operating lease equipment
|
55.9
|
|
|
54.6
|
|
|
46.4
|
|
|||
Maintenance and other operating lease expenses
|
4.0
|
|
|
8.0
|
|
|
8.1
|
|
|||
Income before provision for income taxes
|
126.5
|
|
|
8.1
|
|
|
165.4
|
|
|||
Provision for income taxes
|
33.5
|
|
|
64.1
|
|
|
60.9
|
|
|||
Income (loss) from continuing operations
|
93.0
|
|
|
(56.0
|
)
|
|
104.5
|
|
|||
Loss on discontinued operations
|
(7.0
|
)
|
|
(4.5
|
)
|
|
(9.2
|
)
|
|||
Net income (loss)
|
$
|
86.0
|
|
|
$
|
(60.5
|
)
|
|
$
|
95.3
|
|
New business volume — funded
|
$
|
2,625.4
|
|
|
$
|
3,281.4
|
|
|
$
|
1,747.3
|
|
|
Quarters Ended
|
||||||||||
|
March 31,
2018 |
|
December 31,
2017 |
|
March 31,
2017 |
||||||
Interest income
|
$
|
428.0
|
|
|
$
|
421.1
|
|
|
$
|
429.0
|
|
Rental income on operating leases
|
114.0
|
|
|
112.0
|
|
|
108.3
|
|
|||
Finance revenue
|
542.0
|
|
|
533.1
|
|
|
537.3
|
|
|||
Interest expense
|
120.1
|
|
|
110.2
|
|
|
105.1
|
|
|||
Depreciation on operating lease equipment
|
55.9
|
|
|
54.6
|
|
|
46.4
|
|
|||
Maintenance and other operating lease expenses
|
4.0
|
|
|
8.0
|
|
|
8.1
|
|
|||
NFR
|
$
|
362.0
|
|
|
$
|
360.3
|
|
|
$
|
377.7
|
|
AEA
|
$
|
39,259.0
|
|
|
$
|
38,466.4
|
|
|
$
|
40,510.9
|
|
|
Quarters Ended
|
|||||||
|
March 31,
2018 |
|
December 31,
2017 |
|
March 31,
2017 |
|||
As a % of AEA:
|
|
|
|
|
|
|
|
|
Interest income
|
4.36
|
%
|
|
4.38
|
%
|
|
4.24
|
%
|
Rental income on operating leases
|
1.16
|
%
|
|
1.16
|
%
|
|
1.07
|
%
|
Finance revenue
|
5.52
|
%
|
|
5.54
|
%
|
|
5.31
|
%
|
Interest expense
|
1.22
|
%
|
|
1.15
|
%
|
|
1.04
|
%
|
Depreciation on operating lease equipment
|
0.57
|
%
|
|
0.57
|
%
|
|
0.46
|
%
|
Maintenance and other operating lease expenses
|
0.04
|
%
|
|
0.08
|
%
|
|
0.08
|
%
|
NFM
|
3.69
|
%
|
|
3.74
|
%
|
|
3.73
|
%
|
|
|
Select Data
(dollars in millions)
|
|||||||||||
|
|
|
|
|
|
||||||
|
At or for the Quarters Ended
|
||||||||||
|
March 31,
2018 |
|
December 31,
2017 |
|
March 31,
2017 |
||||||
Select Statement of Operations Data
|
|
|
|
|
|
|
|
|
|||
Net interest revenue
|
$
|
270.7
|
|
|
$
|
279.0
|
|
|
$
|
292.6
|
|
Provision for credit losses
|
68.8
|
|
|
30.4
|
|
|
49.7
|
|
|||
Total non-interest income
|
358.3
|
|
|
389.8
|
|
|
330.4
|
|
|||
Total non-interest expenses
|
415.2
|
|
|
693.5
|
|
|
438.9
|
|
|||
Income (loss) from continuing operations, net of tax
|
103.7
|
|
|
(82.8
|
)
|
|
78.2
|
|
|||
Net income (loss)
|
97.0
|
|
|
(88.0
|
)
|
|
179.9
|
|
|||
Net income (loss) applicable to common shareholders
|
97.0
|
|
|
(97.8
|
)
|
|
179.9
|
|
|||
Per Common Share Data
|
|
|
|
|
|
|
|
|
|||
Diluted income per common share — continuing operations
|
$
|
0.79
|
|
|
$
|
(0.70
|
)
|
|
$
|
0.38
|
|
Diluted income per common share
|
$
|
0.74
|
|
|
$
|
(0.74
|
)
|
|
$
|
0.88
|
|
Book value per common share
|
$
|
52.97
|
|
|
$
|
53.25
|
|
|
$
|
50.14
|
|
Tangible book value per common share
|
$
|
49.25
|
|
|
$
|
49.58
|
|
|
$
|
46.09
|
|
Dividends declared per common share
|
$
|
0.16
|
|
|
$
|
0.16
|
|
|
$
|
0.15
|
|
Dividend payout ratio
|
21.6
|
%
|
|
NM
|
|
|
17.0
|
%
|
|||
Performance Ratios
|
|
|
|
|
|
|
|||||
Return (continuing operations) on average common stockholders' equity (ROATCE)
|
6.83
|
%
|
|
8.42
|
%
|
|
5.36
|
%
|
|||
Return on average common stockholders' equity applicable to Common shareholders (ROE)
|
6.09
|
%
|
|
(5.29
|
)%
|
|
4.49
|
%
|
|||
Net finance revenue as a percentage of average earning assets
|
3.45
|
%
|
|
3.59
|
%
|
|
3.57
|
%
|
|||
Return on Average Earning Assets applicable to Common Shareholders (ROA)
|
0.92
|
%
|
|
(0.83
|
)%
|
|
0.67
|
%
|
|||
Return (from continuing operations) on average continuing operations total assets
|
0.87
|
%
|
|
(0.70
|
)%
|
|
0.63
|
%
|
|||
Balance Sheet Data
|
|||||||||||
Loans including receivables pledged
|
$
|
29,453.6
|
|
|
$
|
29,113.9
|
|
|
$
|
29,691.4
|
|
Allowance for loan losses
|
(447.6
|
)
|
|
(431.1
|
)
|
|
(448.6
|
)
|
|||
Operating lease equipment, net
|
6,774.9
|
|
|
6,738.9
|
|
|
7,516.2
|
|
|||
Goodwill
|
369.9
|
|
|
369.9
|
|
|
686.1
|
|
|||
Total cash and deposits
|
4,096.3
|
|
|
1,718.7
|
|
|
6,156.9
|
|
|||
Investment securities
|
5,910.5
|
|
|
6,469.9
|
|
|
4,476.3
|
|
|||
Assets of discontinued operation
|
463.1
|
|
|
501.3
|
|
|
12,718.2
|
|
|||
Total assets
|
51,542.5
|
|
|
49,278.7
|
|
|
63,094.4
|
|
|||
Deposits
|
30,593.9
|
|
|
29,569.3
|
|
|
32,336.2
|
|
|||
Borrowings
|
10,437.3
|
|
|
8,974.4
|
|
|
14,736.3
|
|
|||
Liabilities of discontinued operation
|
496.6
|
|
|
509.3
|
|
|
2,731.9
|
|
|||
Total common stockholders’ equity
|
6,801.8
|
|
|
6,995.0
|
|
|
10,165.2
|
|
|||
Credit Quality
|
|
|
|
|
|
|
|||||
Non-accrual loans as a percentage of loans
|
0.80
|
%
|
|
0.76
|
%
|
|
0.87
|
%
|
|||
Net charge-offs as a percentage of average loans
|
0.68
|
%
|
|
0.26
|
%
|
|
0.37
|
%
|
|||
Allowance for loan losses as a percentage of loans
|
1.52
|
%
|
|
1.48
|
%
|
|
1.51
|
%
|
|||
Capital Ratios
|
|
|
|
|
|
|
|||||
Total ending equity to total ending assets
|
13.8
|
%
|
|
14.9
|
%
|
|
16.1
|
%
|
|||
CET1 Capital Ratio (fully phased-in)
|
14.1
|
%
|
|
14.4
|
%
|
|
14.3
|
%
|
|||
Tier 1 Capital Ratio (fully phased-in)
|
14.8
|
%
|
|
15.1
|
%
|
|
14.3
|
%
|
|||
Total Capital Ratio (fully phased-in)
|
16.8
|
%
|
|
16.2
|
%
|
|
15.1
|
%
|
|
1.
|
Total Net Revenue, Net Finance Revenue, and Net Operating Lease Revenue
|
2.
|
Operating Expenses and Net Efficiency Ratio, Excluding Certain Costs
|
3.
|
Other Non-Interest Income
|
4.
|
Earning Assets and Average Earning Assets (“AEA”)
|
Earning Assets
(dollars in millions)
|
|||||||||||
|
Quarters Ended
|
||||||||||
Period End Earning Assets
|
March 31,
2018 |
|
December 31,
2017 |
|
March 31,
2017 |
||||||
Loans
|
$
|
29,453.6
|
|
|
$
|
29,113.9
|
|
|
$
|
29,691.4
|
|
Operating lease equipment, net
|
6,774.9
|
|
|
6,738.9
|
|
|
7,516.2
|
|
|||
Assets held for sale
|
2,298.8
|
|
|
2,263.1
|
|
|
562.6
|
|
|||
Credit balances of factoring clients
|
(1,549.0
|
)
|
|
(1,468.6
|
)
|
|
(1,547.1
|
)
|
|||
Interest-bearing cash
|
3,895.4
|
|
|
1,440.1
|
|
|
5,415.2
|
|
|||
Investment securities
|
5,910.5
|
|
|
6,469.9
|
|
|
4,476.3
|
|
|||
Securities purchased under agreement to resell
|
250.0
|
|
|
150.0
|
|
|
—
|
|
|||
Indemnification assets
|
120.5
|
|
|
142.4
|
|
|
313.1
|
|
|||
Total earning assets (Non-GAAP)
|
$
|
47,154.7
|
|
|
$
|
44,849.7
|
|
|
$
|
46,427.7
|
|
Average Earning Assets (for the respective periods) (Non-GAAP)
|
$
|
45,265.1
|
|
|
$
|
44,562.1
|
|
|
$
|
46,638.9
|
|
AEA, excluding noteworthy items (Non-GAAP)
|
$
|
45,265.1
|
|
|
$
|
44,562.1
|
|
|
$
|
46,638.9
|
|
5.
|
Tangible Book Value, ROTCE and Tangible Book Value per Share
|
Tangible Book Value
(dollars in millions)
|
|||||||||||
|
|
|
|
|
|
||||||
|
Quarters Ended
|
||||||||||
Tangible Book Value
|
March 31,
2018 |
|
December 31,
2017 |
|
March 31,
2017 |
||||||
Total common shareholders' equity
|
$
|
6,801.8
|
|
|
$
|
6,995.0
|
|
|
$
|
10,165.2
|
|
Less: Goodwill
|
(369.9
|
)
|
|
(369.9
|
)
|
|
(686.1
|
)
|
|||
Intangible assets
|
(107.0
|
)
|
|
(113.0
|
)
|
|
(134.3
|
)
|
|||
Tangible book value (Non-GAAP)
|
6,324.9
|
|
|
6,512.1
|
|
|
9,344.8
|
|
|||
Less: Disallowed deferred tax asset
|
(98.9
|
)
|
|
(104.8
|
)
|
|
(140.6
|
)
|
|||
Tangible common equity (Non-GAAP)
|
$
|
6,226.0
|
|
|
$
|
6,407.3
|
|
|
$
|
9,204.2
|
|
Average tangible common equity (Non-GAAP)
|
$
|
6,332.1
|
|
|
$
|
6,327.5
|
|
|
$
|
9,118.8
|
|
Estimated capital adjustment related to Commercial Air sale
|
—
|
|
|
—
|
|
|
(2,975.0
|
)
|
|||
Average tangible common equity, excluding noteworthy items (Non-GAAP)
|
$
|
6,332.1
|
|
|
$
|
6,327.5
|
|
|
$
|
6,143.8
|
|
|
|
|
|
|
|
||||||
Net income (loss) applicable to common shareholders
|
$
|
97.0
|
|
|
$
|
(97.8
|
)
|
|
$
|
179.9
|
|
Goodwill impairment
|
—
|
|
|
222.1
|
|
|
—
|
|
|||
Intangible asset amortization, after tax
|
4.4
|
|
|
3.7
|
|
|
4.1
|
|
|||
Non-GAAP income - for ROTCE calculation
|
$
|
101.4
|
|
|
$
|
128.0
|
|
|
$
|
184.0
|
|
Return on average tangible common equity
|
6.41
|
%
|
|
8.09
|
%
|
|
8.07
|
%
|
|||
|
|
|
|
|
|
||||||
Non-GAAP income applicable to common shareholders (from the following non-GAAP noteworthy tables)
|
$
|
90.2
|
|
|
$
|
125.1
|
|
|
$
|
163.1
|
|
Intangible asset amortization, after tax
|
4.4
|
|
|
3.7
|
|
|
4.1
|
|
|||
Non-GAAP income - for ROTCE calculation
|
$
|
94.6
|
|
|
$
|
128.8
|
|
|
$
|
167.2
|
|
Return on average tangible common equity, excluding noteworthy items
|
5.98
|
%
|
|
8.14
|
%
|
|
10.89
|
%
|
|||
|
|
|
|
|
|
||||||
Income (loss) from continuing operations applicable to common shareholders
|
$
|
103.7
|
|
|
$
|
(92.6
|
)
|
|
$
|
78.2
|
|
Goodwill impairment
|
—
|
|
|
222.1
|
|
|
—
|
|
|||
Intangible asset amortization, after tax
|
4.4
|
|
|
3.7
|
|
|
4.1
|
|
|||
Non-GAAP income from continuing operations - for ROTCE calculation
|
$
|
108.1
|
|
|
$
|
133.2
|
|
|
$
|
82.3
|
|
Non-GAAP income from continuing operations (from next page)
|
$
|
96.9
|
|
|
$
|
130.3
|
|
|
$
|
109.4
|
|
Intangible asset amortization, after tax
|
4.4
|
|
|
3.7
|
|
|
4.1
|
|
|||
Non-GAAP income from continuing operations - for ROTCE calculation
|
$
|
101.3
|
|
|
$
|
134.0
|
|
|
$
|
113.5
|
|
Average tangible common equity
(7)
|
$
|
6,332.1
|
|
|
$
|
6,327.5
|
|
|
$
|
9,118.8
|
|
Estimated capital adjustment related to Commercial Air sale
|
—
|
|
|
—
|
|
|
(2,975.0
|
)
|
|||
Average tangible common equity
(7)
pro forma for estimated capital adjustment
|
$
|
6,332.1
|
|
|
$
|
6,327.5
|
|
|
$
|
6,143.8
|
|
Return on average tangible common equity, proforma for estimated capital adjustment
|
6.83
|
%
|
|
8.42
|
%
|
|
5.36
|
%
|
|||
Return on average tangible common equity, after noteworthy items
(8)
and proforma for estimated capital adjustment
|
6.40
|
%
|
|
8.47
|
%
|
|
7.40
|
%
|
6.
|
Net income excluding noteworthy items and income from continuing operations excluding noteworthy items
|
(1)
|
Items may not sum due to rounding.
|
(2)
|
Income tax rates vary depending on the specific item and the entity location in which it is recorded.
|
|
Quarters Ended
|
||||||||||
Effective Tax Rate Reconciliation - Noteworthy Items
|
March 31, 2018
|
|
December 31, 2017
|
|
March 31, 2017
|
||||||
Provision for income taxes - GAAP
|
$
|
41.3
|
|
|
$
|
27.7
|
|
|
$
|
56.2
|
|
Income taxes on noteworthy items
|
2.5
|
|
|
(26.4
|
)
|
|
8.3
|
|
|||
Provision for income taxes, before noteworthy items - Non-GAAP
|
38.8
|
|
|
54.1
|
|
|
47.9
|
|
|||
Income tax - remaining discrete items
|
1.7
|
|
|
(22.4
|
)
|
|
(2.3
|
)
|
|||
Provision for income taxes, before noteworthy and discrete tax items - Non-GAAP
|
$
|
37.1
|
|
|
$
|
76.5
|
|
|
$
|
50.2
|
|
Income (loss) from continuing operations before provision for income taxes - GAAP
|
$
|
145.0
|
|
|
$
|
(55.1
|
)
|
|
$
|
134.4
|
|
Noteworthy items before tax
|
(9.3
|
)
|
|
249.3
|
|
|
22.9
|
|
|||
Adjusted income from continuing operations before provision for income taxes - Non-GAAP
|
$
|
135.7
|
|
|
$
|
194.2
|
|
|
$
|
157.3
|
|
Effective tax rate - GAAP
|
28.5
|
%
|
|
(50.3
|
)%
|
|
41.8
|
%
|
|||
Effective tax rate, before noteworthy items - Non-GAAP
|
28.6
|
%
|
|
27.9
|
%
|
|
30.5
|
%
|
|||
Effective tax rate, before noteworthy and tax discrete items - Non-GAAP
|
27.3
|
%
|
|
39.4
|
%
|
|
31.9
|
%
|
8.
|
Regulatory
|
|
•
|
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, to repay secured and unsecured debt, to issue qualifying capital instruments, including Tier 1 qualifying preferred stock, and for a return of capital,
|
•
|
our plans to change our funding mix, to access new sources of funding, and to broaden our use of deposit taking capabilities, including increasing our level of commercial deposits and expanding our treasury management services,
|
•
|
our pending or potential acquisition and disposition plans, and the integration and restructuring risks inherent in such acquisitions, including our proposed sale of our Financial Freedom reverse mortgage servicing business and reverse mortgage loan portfolio, our Business Air loan portfolio, and NACCO, our European railcar leasing business,
|
•
|
our credit risk management and credit quality,
|
•
|
our asset/liability risk management,
|
•
|
our funding, borrowing costs and net finance revenue,
|
•
|
our operational risks, including risk of operational errors, failure of operational controls, success of systems enhancements and expansion of risk management and control functions,
|
•
|
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,
|
•
|
our legal risks, including the enforceability of our agreements, the impact of legal proceedings, and the impact of changes in laws and regulations,
|
•
|
our growth rates, and
|
•
|
our commitments to extend credit or purchase equipment.
|
•
|
risks inherent in deposit funding, including reducing reliance on brokered deposits, increasing commercial deposits and retail non-maturity accounts, and expanding treasury management services,
|
•
|
risks inherent in capital markets, including liquidity, changes in market interest rates and quality spreads, and our access to secured and unsecured debt and asset-backed securitization markets,
|
•
|
risks inherent in a return of capital, including risks related to obtaining regulatory approval, the nature and allocation among different methods of returning capital, and the amount and timing of any capital return,
|
•
|
risks of actual or perceived economic slowdown, downturn or recession, including slowdown in customer demand for credit or increases in non-accrual loans or default rates,
|
•
|
industry cycles and trends, including in oil and gas, power and energy, telecommunications, information technology, and commercial and residential real estate.
|
•
|
uncertainties associated with risk management, including evaluating credit, adequacy of reserves for credit losses, prepayment risk, asset/liability risk, interest rate and currency risks, and cybersecurity risks,
|
•
|
risks of implementing new processes, procedures, and systems, including those required to strengthen internal controls, improve data quality, and reliability, or comply with the additional laws and regulations applicable to systemically important financial institutions, such as the CCAR process, enhanced prudential standards, and Basel III,
|
•
|
risks associated with the value and recoverability of leased equipment and related lease residual values, including railcars, telecommunications towers, technology and office equipment, information technology equipment, including data centers, and large and small industrial, medical, and transportation equipment,
|
•
|
risks of failing to achieve the projected revenue growth from new business initiatives or the projected expense reductions from efficiency improvements,
|
•
|
application of goodwill accounting or fair value accounting in volatile markets,
|
•
|
regulatory changes and developments, including changes in laws or regulations governing our business and operations, or affecting our assets, including our operating lease equipment or changes in the regulatory environment, whether due to events or factors specific to CIT, or other large multi-national or regional banks, or the industry in general,
|
•
|
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,
|
•
|
risks associated with acquisitions of businesses or asset portfolios, including integrating and reducing duplication in personnel, policies, internal controls, and systems.
|
|
|
|
|
|
|
|
|
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
|
||||
January 1 - 31, 2018
|
87,600
|
|
|
$
|
49.62
|
|
|
87,600
|
|
|
|
February 1 - 28, 2018
|
1,653,519
|
|
|
$
|
52.39
|
|
|
1,653,519
|
|
|
|
March 1 - 31, 2018
|
1,924,747
|
|
|
$
|
53.98
|
|
|
1,924,747
|
|
|
|
Total Purchases
|
3,665,866
|
|
|
|
|
|
|
|
|
|
(a)
|
Exhibits
|
101.INS
|
|
XBRL Instance Document (Includes the following financial information included in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, 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.
|
|
|
May 4, 2018
|
CIT GROUP INC.
|
|
|
|
/s/ John Fawcett
|
|
John Fawcett
|
|
Executive Vice President and
Chief Financial Officer |
|
|
|
/s/ Edward K. Sperling
|
|
Edward K. Sperling
|
|
Executive Vice President and Controller
|
“
Participant
”:
|
|
“
Date of Award
”:
|
|
“
Number of RSUs Granted
”:
|
|
(A)
|
Grant of Performance Share Units
. The Company hereby grants to the Participant the Target Number of PSUs Granted, effective as of the Date of Award and subject to the terms and conditions of the Plan and this Award Agreement. Each PSU represents the unsecured right to receive a number of Shares, if any, in accordance with the terms and conditions of this Award Agreement. The Participant shall not be required to pay any additional consideration for the issuance of the Shares, if any, upon settlement of the PSUs.
|
(B)
|
Vesting and Settlement of PSUs
.
|
(1)
|
Except as otherwise provided in Section (C) or (D) below, the final number of Shares actually awarded to the Participant with respect to the Target Number of PSUs granted, if any, (the “
Awarded Shares
”) shall be based on the attainment of specified levels of the “
Performance Measures
” (each as defined and set forth in
Exhibit A
) that have been achieved during the “
Performance Period
” (as defined and set forth in
Exhibit A
).
|
(2)
|
Except as otherwise provided in Section (C) or (D) below, subject to the Participant’s continued employment with the Company and/or any Subsidiary or affiliate (the “
Company Group
”) from the Date of Award until the last day of the Performance Period (the “
Final Performance Date
”) and compliance with, and subject to, the terms and conditions of this Award Agreement, as soon as administratively practicable following the Final Performance Date but subject to Section (B)(3) below, the Committee shall certify the level of Performance Measures attained (the “
Determination Date
”). The Participant’s Awarded Shares, if any, shall be determined as of the Determination Date in accordance with the terms and conditions set forth in
Exhibit A
.
|
(3)
|
Except as otherwise provided in Section (C)(1) or (D) below, the Awarded Shares, if any, shall be delivered to the Participant within thirty (30) days following the Determination Date, but in no event later than March 15, 2021 (the “
Settlement Date
”), provided that the Settlement Date may be delayed, in the sole discretion of the Committee and in accordance with applicable law (including Section 409A (as defined below)), if the Committee is considering whether Section (L) applies to the Participant.
|
(4)
|
The Awarded Shares delivered to the Participant on the Settlement Date (or such other date Awarded Shares are settled in accordance with Section (C)(1) or (D) below, if applicable) shall not be subject to transfer restrictions and shall be fully paid, non-assessable and registered in the Participant’s name.
|
(5)
|
If, after the Date of Award and prior to the Determination Date (or such other date Awarded Shares are settled in accordance with Section (C)(1) or (D) below, if applicable) (the “
Dividend Equivalent Period
”), dividends with respect to the Awarded Shares are declared or paid by the Company, the Participant shall be credited with, and entitled to receive, dividend equivalents in an amount, without interest, equal to the cumulative dividends declared or paid on a Share, if any, during the Dividend Equivalent Period, multiplied by the number of Awarded Shares. Unless otherwise determined by the Committee, dividend equivalents paid in cash shall not be reinvested in Shares and shall remain uninvested. The dividend equivalents credited in respect of the Awarded Shares shall
|
(6)
|
In the sole discretion of the Committee and notwithstanding any other provision of this Award Agreement to the contrary, in lieu of the delivery of the Awarded Shares, the PSUs and any dividend equivalents payable in Shares, may be settled through a payment in cash equal to the Fair Market Value of the applicable number of the Awarded Shares, determined on (i) the Determination Date; (ii) the Final Performance Date if settlement is in accordance with Section (D)(1), (D)(2), (D)(3), (D)(4) or (D)(5) below; or (iii) in the case of settlement in accordance with Section (C)(1) or (D)(6) below, the date of the Participant’s “
Separation from Service
” (within the meaning of the Committee’s established methodology for determining “
Separation from Service
” for purposes of Section 409A (as defined below)) or the date of Disability, as applicable. Settlement under this Section (B)(6) shall be made at the time specified under Section (B)(3), (B)(5), (C)(1), (C)(2), (C)(3) or (D), as applicable.
|
(C)
|
Separation from Service
.
|
(1)
|
Notwithstanding Section (B) above, if, after the Date of Award and prior to the Final Performance Date, the Participant incurs a Disability (as defined below) or a Separation from Service from the Company Group due to death, the PSUs shall vest immediately and the final number of Awarded Shares awarded to the Participant shall equal the Target Number of PSUs (the “
Target Awarded Shares
”) and the Participant (or the Participant’s beneficiary or legal representative, if applicable) shall not be entitled to any additional Shares based on the Company’s achievement of actual Performance Measures in accordance with
Exhibit A
. If this Section (C)(1) is applicable, then all references to “Awarded Shares” in Sections (B) and (L) shall mean Target Awarded Shares instead. The Target Awarded Shares shall be paid to the Participant (or the Participant’s beneficiary or legal representative, if applicable) within thirty (30) days following the Participant’s Disability or Separation from Service due to death. The Participant (or the Participant’s beneficiary or legal representative, if applicable) shall also be entitled to receive all credited and unpaid dividend equivalents with respect to the Target Awarded Shares and such dividend equivalents shall be payable at the same time such Target Awarded Shares are paid in accordance with this Section (C)(1). “
Disability
” shall have the same meaning as defined in the Company’s applicable long-term disability plan or policy last in effect prior to the first date the Participant suffers from such Disability;
provided
,
however
, to the extent a “Disability” event does not also constitute a “Disability” as defined in Section 409A, such Disability event shall not constitute a Disability for purposes of this Section (C)(1).
|
(2)
|
Notwithstanding Section (B) above and subject to Section (D) below, if, prior to the Final Performance Date, the Participant incurs a Separation from Service initiated by the Company without Cause (as defined below and including, for the avoidance of doubt, in connection with a sale of a business unit) and at such time the Participant does not satisfy the conditions of Retirement (as defined below), and subject to the terms and conditions of the Plan and this Award Agreement, including Section (L) below, on the date of such Separation from Service, the Participant’s Target Number of PSUs shall be pro-rated by multiplying the Target Number of PSUs by a fraction, (i) the numerator as the number of full and partial months that have transpired between the first day of the Performance Period and the date of such Separation from Service, rounded up to a whole number, and (ii) the denominator as 36 (the “
Pro-Rata Target Number of PSUs
”). Calculation and payment of the Awarded Shares, if any, payable to the Participant based on the Pro-Rata Target Number of PSUs (and any credited and unpaid dividend equivalents) shall be made in accordance with Section (B) above and
Exhibit A
, except the Participant shall no longer be required to be continually employed with the Company Group until the Final Performance Date as provided in Section (B)(2) above.
|
(3)
|
Notwithstanding Section (B) and (C)(2) above and subject to Section (D) below, if, prior to the Final Performance Date, the Participant incurs a Separation from Service initiated (i) by the Participant and at the time of such Separation from Service no grounds exist such that the Company could terminate the Participant for Cause, or (ii) by the Company without Cause (as defined below and including for the avoidance of doubt, in connection with a sale of a business unit), and, in each case, the Participant satisfies the conditions of Retirement (as defined below), and subject to the terms and conditions of the Plan and this Award Agreement, including Section (L) below, the final number of Awarded Shares, if any, payable to the Participant (and any credited and unpaid dividend equivalents) shall be made in accordance with Section (B) above and
Exhibit A
, except the Participant shall no longer be required to be continually employed with the Company Group until the Final Performance Date as provided in Section (B)(2) above. “
Retirement
” is defined as the Participant’s Separation from Service upon or after (A) attaining age 55 with at least 11 years of service with the Company Group, or (B) attaining age 60 with at least 6 years of service with the Company Group, in each case as determined in accordance with the Company Group’s policies and procedures. “
Cause
” means any of the following: (i) the commission of a misdemeanor involving moral turpitude or a felony; (ii) the Participant’s act or omission that causes or may reasonably be expected to cause material injury to the Company Group, its vendors, customers, business partners or affiliates or that results or is intended to result in personal gain at the expense of the Company Group, its vendors, customers, business partners or affiliates; (iii) the Participant’s substantial and continuing neglect of his or her job responsibilities for the Company Group (including excessive unauthorized absenteeism); (iv) the Participant’s failure to comply with, or violation of, the Company Group’s Code of Business Conduct; (v) the Participant’s act
|
(4)
|
If, prior to the Final Performance Date, the Participant’s employment with the Company Group terminates for any reason, except to the extent provided for in this Section (C) or Section (D) below, the unvested PSUs shall be cancelled immediately and the Participant shall immediately forfeit any rights to, and shall not be entitled to receive any payments with respect to, the PSUs including, without limitation, dividend equivalents pursuant to Section (B)(5).
|
(D)
|
Change of Control
.
|
(1)
|
Notwithstanding Section (B) above and subject to Sections (D)(2) through (D)(6) below, if, during the Participant’s employment with the Company Group but prior to the Final Performance Date, a Change of Control occurs, then for purposes of Section (B) above, the Performance Measures shall be deemed to have been satisfied at the “
Target Levels
” as defined and set forth in
Exhibit A
and the final number of Shares awarded to the Participant, subject to the Participant’s compliance with the terms and conditions of Section (B)(2) above (including, without limitation, the Participant’s continued employment with the Company Group until the Final Performance Date), shall equal the Target Awarded Shares. The Target Awarded Shares (and any credited and unpaid dividend equivalents) shall be delivered to the Participant following the Final Performance Date, as determined by the Committee in its sole discretion, but in no event later than March 15, 2021, and the Participant shall not be entitled to any additional Shares based on the Company’s achievement of actual Performance Measures in accordance with
Exhibit A
. If this Section (D)(1) is applicable, all references to “Awarded Shares” in Sections (B) and (L) shall mean Target Awarded Shares instead.
|
(2)
|
Notwithstanding Section (C)(2) and (D)(1) above, if, (i) during the Participant’s employment with the Company Group, but prior to the Final Performance Date, a Change of Control occurs and (ii) the Participant incurs a Separation from Service prior to the Final Performance Date that is described in Section (C)(2) above that occurs more than two years following such Change of Control, then the final number of Awarded Shares awarded to the Participant, subject to the terms and conditions set forth in Section (L) below, shall equal the Pro-Rata Target Number of PSUs attributable to such Separation of Service (the “
Pro-Rata Awarded Shares
”). The Pro-Rata Awarded Shares (and any credited and unpaid dividend equivalents) shall be delivered to the Participant following the Final Performance Date, as determined by the Committee in its sole discretion, but in no event later than March 15, 2021, the Participant shall no longer be required to be continually employed with the Company Group until the Final Performance Date as provided in Section (B)(2) above, and the Participant shall not be entitled to any additional Shares based on the Company’s achievement of actual Performance Measures in accordance with
Exhibit A
. If this Section (D)(2) is applicable, all references to “Awarded Shares” in Sections (B), (C)(2) and (L) shall mean Pro-Rata Awarded Shares instead.
|
(3)
|
Notwithstanding Section (C)(2) above, if, following the Participant’s Separation from Service described in Section (C)(2) above a Change of Control occurs prior to the Final Performance Date, then for purposes of Section (C)(2) above, the Performance Measures shall be deemed to have been satisfied at Target Levels and the final number of Awarded Shares awarded to the Participant, subject to the terms and conditions set forth in Section (L) below, shall equal the Pro-Rata Awarded Shares. The Pro-Rata Awarded Shares (and any credited and unpaid dividend equivalents) shall be delivered to the Participant following the Final Performance Date, as determined by the Committee in its sole discretion, but in no event later than March 15, 2021, the Participant shall no longer be required to be continually employed with the Company Group until the Final Performance Date as provided in Section (B)(2) above, and the Participant shall not be entitled to any additional Shares based on the Company’s achievement of actual Performance Measures in accordance with
Exhibit A
. If this Section (D)(3) is applicable, all references to “Awarded Shares” in Sections (B), (C)(2) and (L) shall mean Pro-Rata Awarded Shares instead.
|
(4)
|
Notwithstanding Section (C)(3) and (D)(1) above, if, (i) during the Participant’s employment with the Company Group, but prior to the Final Performance Date, a Change of Control occurs and (ii) the Participant incurs a Separation from Service prior to the Final Performance Date that is described in Section (C)(3) above that occurs more than two years following such Change of Control, then the Target Awarded Shares (and any credited and unpaid dividend equivalents) shall be delivered to the Participant following the Final Performance Date, as determined by the Committee in its sole discretion, but in no event later than March 15, 2021, the Participant shall no longer be required to be continually employed with the Company Group until the Final Performance Date as provided in Section (B)(2) above, and the Participant shall not be entitled to any additional Shares based on the Company’s achievement of actual Performance Measures in accordance with
Exhibit A
. If this Section (D)
|
(5)
|
Notwithstanding Section (C)(3) above, if, following the Participant’s Separation from Service described in Section (C)(3) above a Change of Control occurs prior to the Final Performance Date, then for purposes of Section (C)(3) above, the Performance Measures shall be deemed to have been satisfied at Target Levels and the final number of Awarded Shares awarded to the Participant, subject to the terms and conditions set forth in Section (L) below, shall equal the Target Awarded Shares. The Target Awarded Shares (and any credited and unpaid dividend equivalents) shall be delivered to the Participant following the Final Performance Date, as determined by the Committee in its sole discretion, but in no event later than March 15, 2021, the Participant shall no longer be required to be continually employed with the Company Group until the Final Performance Date as provided in Section (B)(2) above, and the Participant shall not be entitled to any additional Shares based on the Company’s achievement of actual Performance Measures in accordance with
Exhibit A
. If this Section (D)(5) is applicable, all references to “Awarded Shares” in Sections (B), (C)(3) and (L) shall mean Target Awarded Shares instead.
|
(6)
|
Notwithstanding any provision contained in the Plan or this Award Agreement to the contrary, if (i) prior to the Final Performance Date, a Change of Control occurs and (ii) within two years following such Change of Control, the Participant incurs a Separation from Service prior to the Final Performance Date that is (1) initiated by the Company without Cause, (2) initiated by the Participant for “Good Reason” (as defined below) or (3) due to the Participant’s Retirement, the PSUs shall vest immediately on such Separation from Service and the final number of Awarded Shares awarded to the Participant shall be the Target Awarded Shares. The Participant shall not be entitled to any additional Shares based on the Company’s achievement of actual Performance Measures in accordance with
Exhibit A
. Such Target Awarded Shares (and any credited and unpaid dividend equivalents) shall be settled within thirty (30) days following such Separation from Service, unless such accelerated vesting and settlement of PSUs (and dividend equivalents) following the Participant’s Separation from Service is prohibited or limited by applicable law and/or regulation. “
Good Reason
” shall mean, without the Participant’s consent, a material diminution of the Participant’s (x) base salary (except in the event of a compensation reduction applicable to the Participant and other employees of comparable rank and/or status), (y) the Participant 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 Participant has to commute to work by more than fifty miles, or (z) duties and responsibilities (except a temporary reduction while the Participant is physically or mentally incapacitated or a modification in the duties and/or responsibilities of the Participant and other employees of comparable rank and/or status following a Change of Control), provided, that a Separation from Service for Good Reason shall not occur unless (A) the Participant has provided the Company written notice specifying in detail the alleged condition of Good Reason within thirty (30) days of the occurrence of such condition; (B) the Company has failed to cure such alleged condition within ninety (90) days following the Company’s receipt of such written notice; and (C) if the Committee (or its designee) has determined that the Company has failed to cure such alleged condition, the Participant initiates a Separation from Service within five (5) days following the end of such 90-day cure period.
|
(7)
|
For Sections (B)(2), (C)(2) and (C)(3) above, if a Change of Control occurs on or following the Final Performance Date but prior to the Determination Date, the Awarded Shares (or Pro-Rata Awarded Shares, if applicable), if any, as determined under Section (B)(2), (C)(2) or (C)(3) above based on actual achievement of the Performance Measures in accordance with
Exhibit A
, shall be delivered to the Participant following the Final Performance Date but no later than March 15, 2021.
|
(E)
|
Transferability
. The PSUs are not transferable other than by last will and testament, by the laws of descent and distribution pursuant to a domestic relations order, or as otherwise permitted under Section 4.6 of the Plan.
|
(F)
|
Incorporation of Plan
. The Plan includes terms and conditions governing all Awards granted thereunder and is incorporated into this Award Agreement by reference unless specifically stated herein. This Award Agreement and the rights of the Participant hereunder are subject to the terms and conditions of the Plan, as amended from time to time and as supplemented by this Award Agreement, and to such rules and regulations as the Committee may adopt under the Plan. If there is any inconsistency between the terms of this Award Agreement and the terms of the Plan, the Plan’s terms shall supersede and replace the conflicting terms of this Award Agreement.
|
(G)
|
No Entitlements
.
|
(1)
|
Neither the Plan nor the Award Agreement confers on the Participant any right or entitlement to receive compensation, including, without limitation, any base salary or incentive compensation, in any specific amount for any future fiscal year (including, without limitation, any grants of future Awards under the Plan) nor impacts in any way the Company Group’s determination of the amount, if any, of the Participant’s base salary or incentive compensation. This Award of PSUs made under this Award Agreement is completely independent of any other Awards or grants and is made at the sole discretion of the Company. The PSUs do not constitute salary, wages, regular compensation, recurrent compensation, pensionable compensation or contractual compensation for the
|
(2)
|
The PSUs are awarded to the Participant by virtue of the Participant’s employment with, and services performed for, the Company Group. The Plan or the Award Agreement does not constitute an employment agreement. Nothing in the Plan or the Award Agreement shall modify the terms of the Participant’s employment, including, without limitation, the Participant’s status as an “at will” employee of the Company Group, if applicable.
|
(3)
|
Subject to any applicable employment agreement, the Company reserves the right to change the terms and conditions of the Participant’s employment, including the division, subsidiary or department in which the Participant is employed. None of the Plan or the Award Agreement, the grant of PSUs, nor any action taken or omitted to be taken under the Plan or the Award Agreement shall be deemed to create or confer on the Participant any right to be retained in the employ of the Company Group, or to interfere with or to limit in any way the right of the Company Group to terminate the Participant’s employment at any time. Moreover, the Separation from Service provisions set forth in Section (C) or (D), as applicable, only apply to the treatment of the PSUs in the specified circumstances and shall not otherwise affect the Participant’s employment relationship. By accepting this Award Agreement, the Participant waives any and all rights to compensation or damages in consequence of the termination of the Participant’s office or employment for any reason whatsoever to the extent such rights arise or may arise from the Participant’s ceasing to have rights under, or be entitled to receive payment in respect of, any unvested PSUs that are cancelled or forfeited as a result of such termination, or from the loss or diminution in value of such rights or entitlements, including by reason of the operation of the terms of the Plan, this Award Agreement or the provisions of any statute or law to taxation. This waiver applies whether or not such termination amounts to a wrongful discharge or unfair dismissal.
|
(H)
|
No Rights as a Stockholder
.
The Participant will have no rights as a stockholder with respect to Shares covered by this Award Agreement (including voting rights) until the date the Participant or his nominee becomes the holder of record of such Shares on the Settlement Date or as provided in Section (C) or (D) above, if applicable.
|
(I)
|
Securities Representation
. The grant of the PSUs and issuance of Shares upon vesting of the PSUs shall be subject to, and in compliance with, all applicable requirements of federal, state or foreign securities law. No Shares may be issued hereunder if the issuance of such Shares would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Shares may then be listed. As a condition to the settlement of the PSUs, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation.
|
(1)
|
He or she has been advised that he or she may be an “affiliate” within the meaning of Rule 144 under the Securities Act of 1933, as amended (the “
Act
”) and in this connection the Company is relying in part on his or her representations set forth in this section (I)(1); and
|
(2)
|
If he or she is deemed an affiliate within the meaning of Rule 144 of the Act, the Shares must be held indefinitely unless an exemption from any applicable resale restrictions is available or the Company files an additional registration statement (or a “re-offer prospectus”) with regard to such Shares and the Company is under no obligation to register the Shares (or to file a “re-offer prospectus”).
|
(3)
|
If he or she is deemed an affiliate within the meaning of Rule 144 of the Act, he or she understands that the exemption from registration under Rule 144 will not be available unless (i) a public trading market then exists for the Shares of the Company, (ii) adequate information concerning the Company is then available to the public, and (iii) other terms and conditions of Rule 144 or any exemption therefrom are complied with; and that any sale of the Shares may be made only in limited amounts in accordance with such terms and conditions.
|
(J)
|
Notices
. Any notice or communication given hereunder shall be in writing and shall be deemed to have been duly given when delivered in person or mailed by certified mail, postage and fees prepaid, or internationally recognized express mail service, as follows:
|
(K)
|
Transfer of Personal Data
.
In order to facilitate the administration of this Award, it will be necessary for the Company Group to collect, hold, and process certain personal information about the Participant. As a condition of accepting this Award, the Participant authorizes, agrees and unambiguously consents to the Company Group collecting, using, disclosing, holding and processing personal data and transferring such data to third parties (collectively, the “
Data Recipients
”) for the primary purpose of the Participant’s participation in, and the general administration of, the Plan and to the transmission by the Company Group of any personal data information related to the PSUs awarded under this Award Agreement, as required in connection with the Participant’s participation in the Plan (including, without limitation, the administration of the Plan) out of the Participant’s home country and including to countries with less data protection than the data protection provided by the Participant’s home country. This authorization and consent is freely given by the Participant. The Participant acknowledges that he/she has been informed that upon request, the Company will provide the name or title and contact information for an officer or employee of the Company Group who is able to answer questions about the collection, use and disclosure of personal data information.
|
(1)
|
The Data Recipients will treat the Participant’s personal data as private and confidential and will not disclose such data for purposes other than the management and administration of this Award and will take reasonable measures to keep the Participant’s personal data private, confidential, accurate and current.
|
(2)
|
Where the transfer is to a destination outside the country to which the Participant is employed, or outside the European Economic Area for Participants employed by the Company Group in the United Kingdom or Ireland, the Company shall take reasonable steps to ensure that the Participant’s personal data continues to be adequately protected and securely held. By accepting this Award, the Participant acknowledges that personal information about the Participant may be transferred to a country that does not offer the same level of data protection as the country in which the Participant is employed.
|
(L)
|
Cancellation; Recoupment; Related Matters.
|
(1)
|
The PSUs granted under this Agreement, and any Shares issued or any credited and unpaid dividend equivalents with respect to such Shares or other payments made in respect thereof, shall be subject to the CIT Group Inc. Recoupment Policy (“
Recoupment Policy
”) as the Company Group may amend from time to time, whether or not such Recoupment Policy is otherwise applicable to the Participant. By accepting the grant of PSUs under this Agreement, including the provisions of
Exhibit A
, the Participant agrees and consents to the Company Group’s application, implementation and enforcement of (a) the Recoupment Policy and (b) any provision of applicable law relating to cancellation, recoupment, rescission or payback of compensation and expressly agrees that the Company Group may take such actions as are necessary to effectuate the Recoupment Policy or applicable law without further consent or action being required by the Participant. To the extent that the terms of this Agreement and the Recoupment Policy conflict, the terms of the recoupment policy shall prevail.
|
(2)
|
In addition to the provisions of Section (L)(1) above, if during the two year period following the Final Performance Date a Clawback Trigger Event (as defined below) occurs, then the Committee (or its designee), in its sole discretion, may direct the Company, at any time from the Settlement Date (or such other date Awarded Shares are settled in accordance with Section (C)(1) or (D) above, if applicable) until the second anniversary of the Final Performance Date, to require the Participant to repay the Company immediately upon written demand by the Company any amount that does not exceed (1) the total Fair Market Value of such Shares (as of the Settlement Date (or such other date Awarded Shares are settled in accordance with Section (C)(1) or (D) above, if applicable)) that have been previously paid to the Participant under this Agreement, plus (2) the value of any other payments previously paid to the Participant under this Agreement, including, without limitation, any cash payments in accordance with Section (B)(6) above or any dividend equivalents. A “
Clawback Trigger Event
” shall be deemed to have occurred in the event (i) of a material restatement of the Company’s financial statements with respect to any fiscal year during the Performance Period; (ii) of a determination that this grant of PSUs was based, in whole or in part, on materially inaccurate financial or performance metrics for any period preceding the granting of this
|
(3)
|
Notwithstanding anything contained in the Plan or this Award Agreement to the contrary, to the extent that the Company is required by law to include any additional recoupment, recovery or forfeiture provisions to outstanding Awards, then such additional provisions shall also apply to this Award Agreement as if they had been included as of the Date of Award and in the manner determined by the Committee in its sole discretion.
|
(4)
|
The remedies provided for in this Award Agreement shall be cumulative and not exclusive, and the Participant agrees and acknowledges that the enforcement by the Company of its rights hereunder shall not in any manner impair, restrict or limit the right of the Company to seek injunctive and other equitable or legal relief under applicable law or the terms of any other agreement between the Company and the Participant.
|
(M)
|
Miscellaneous
.
|
(1)
|
It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Award Agreement, all of which shall be binding upon the Participant.
|
(2)
|
The Board may at any time, or from time to time, terminate, amend, modify or suspend the Plan, and the Board or the Committee may amend or modify this Award Agreement at any time;
provided
,
however
, that, except as provided herein, no termination, amendment, modification or suspension shall materially and adversely alter or impair the rights of the Participant under this Award Agreement, without the Participant’s written consent.
|
(3)
|
This Award Agreement is intended to comply with, or be exempt from, Section 409A of the Code and the regulations and guidance promulgated thereunder (“
Section 409A
”), and accordingly, to the maximum extent permitted, this Award Agreement shall be interpreted in a manner intended to be in compliance therewith. In no event whatsoever shall the Company Group be liable for any additional tax, interest or penalty that may be imposed on the Participant by Section 409A or any damages for failing to comply with Section 409A. If any provision of the Plan or the Award Agreement would, in the sole discretion of the Committee, result or likely result in the imposition on the Participant, a beneficiary or any other person of additional taxes or a penalty tax under Section 409A, the Committee may modify the terms of the Plan or the Award Agreement, without the consent of the Participant, beneficiary or such other person, in the manner that the Committee, in its sole discretion, may determine to be necessary or advisable to avoid the imposition of such penalty tax. Notwithstanding anything to the contrary in the Plan or the Award Agreement, to the extent that the Participant is a “
Specified Employee
” (within the meaning of the Committee’s established methodology for determining “
Specified Employees
” for purposes of Section 409A), payment or distribution of any amounts with respect to the PSUs that are subject to Section 409A will be made as soon as practicable following the first business day of the seventh month following the Participant’s Separation from Service from the Company Group or, if earlier, the date of the Participant’s death.
|
(4)
|
Delivery of the Shares underlying the PSUs or payment in cash (if permitted pursuant to Section (B)(6)) upon settlement is subject to the Participant satisfying all applicable federal, state, provincial, local, domestic and foreign taxes and other statutory obligations (including, without limitation, the Participant’s FICA obligation, National Insurance Contributions or Canada Pension Plan contributions, as applicable), provided that any Participant that is subject to tax regulation in the United Kingdom or Ireland shall also be subject to the provisions of
Exhibit C
attached hereto, if applicable. The Company shall have the power and the right to (i) deduct or withhold from all amounts payable to the Participant pursuant to the PSUs or otherwise, or (ii) require the Participant to remit to the Company, an amount sufficient to satisfy any applicable taxes required by law. The Company may
|
(5)
|
The Company may at any time place legends referencing any applicable federal, state or foreign securities law restrictions on all certificates representing Shares issued pursuant to this Award Agreement. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing Shares acquired pursuant to this Award Agreement in the possession of the Participant.
|
(6)
|
This Award Agreement shall be subject to all applicable laws, rules, guidelines and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required, or the Committee determines are advisable, including but not limited to any applicable laws or the rules, codes, or guidelines of any statutory or regulatory body in any jurisdiction relating to the remuneration of any Participant (in each case as may be in force from time to time). The Participant agrees to take all steps the Company determines are necessary to comply with all applicable provisions of federal, state and foreign securities law in exercising his or her rights under this Award Agreement.
|
(7)
|
Nothing in the Plan or this Agreement should be construed as providing the Participant with financial, tax, legal or other advice with respect to the PSUs. The Company recommends that the Participant consult with his or her financial, tax, legal and other advisors to provide advice in connection with the PSUs.
|
(8)
|
All obligations of the Company under the Plan and this Award Agreement, with respect to the Awards, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
|
(9)
|
To the extent not preempted by federal law, this Award Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware.
|
(10)
|
This Award Agreement may be executed in one or more counterparts, all of which taken together shall constitute one contract.
|
(11)
|
The Participant agrees that the Company may, to the extent permitted by applicable law and as provided for in Section 4.5 of the Plan, retain for itself securities or funds otherwise payable to the Participant pursuant to this Award Agreement, or any other Award Agreement under the Plan, to satisfy any obligation or debt that the Participant owes the Company or its affiliates under any Award Agreement, the Plan or otherwise; provided that the Company may not retain such funds or securities and set off such obligations or liabilities until such time as they would otherwise be distributable to the Participant, and to the extent that Section 409A is applicable, such offset shall not exceed the maximum offset then permitted under Section 409A.
|
(12)
|
The Participant acknowledges that if he or she moves to another country during the term of this Award Agreement, additional terms and conditions may apply and as provided for in Section 4.10.2 of the Plan and the Company reserves the right to impose other requirements to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Award Agreement. The Participant agrees to sign any additional agreements or undertaking that may be necessary to accomplish the foregoing.
|
(13)
|
The Participant acknowledges that he or she has reviewed the Company Policies, as defined in the Recoupment Policy, understands the Company Policies and agrees to be subject to the Company Policies that are applicable to the Participant, including, without limitation, the Regulatory Credit Classifications, as defined in the Recoupment Policy, and any credit risk policies in effect from time to time.
|
(14)
|
The Participant acknowledges that the Company is subject to certain regulatory restrictions that may, under certain circumstances, prohibit the accelerated vesting and distribution of any unvested PSUs as a result of, or following, a Participant’s Separation from Service.
|
(15)
|
The Participant acknowledges that his or her participation in the Plan as a result of this Award Agreement is further good and valuable consideration for the Participant’s obligations under any applicable non-competition, non-solicitation, confidential information, inventions, developments, proprietary property or similar agreement in effect between the Participant and the Company.
|
(16)
|
Neither this Award Agreement or the Shares that may be awarded hereunder represent any right to the payment of earned wages, and the rights of the Participant with respect to any Shares remains fully contingent and subject to the vesting and other terms and conditions of this Award Agreement.
|
(17)
|
Any cash payment made pursuant to Section (B)(5) or (B)(6) of this Award Agreement shall be calculated, where necessary, by reference to the prevailing U.S. dollar exchange rate on the proposed payment date (as determined by the Committee in its sole discretion).
|
(N)
|
Acceptance of Award
. By accepting this Award of Performance Share Units, the Participant is agreeing to all of the terms contained in this Award Agreement, including the terms and conditions with respect to the vesting of the PSUs attached hereto as
Exhibit A
and the non-competition and non-solicitation provisions attached hereto as
Exhibit B
. The Participant may accept this Award by indicating acceptance by e-mail or such other electronic means as the Company may designate in writing or by signing this Award Agreement if the Company does not require acceptance by email or such other electronic means. If the Participant desires to refuse the Award, the Participant must notify the Company in writing. Such notification should be sent to CIT Group Inc., Attention: Senior Vice President, Compensation and Benefits, 1 CIT Drive, Livingston, New Jersey 07039, no later than thirty (30) days after the Date of Award. If the Participant declines the Award, it will be cancelled as of the Date of Award.
|
(A)
|
Definitions
. All capitalized terms shall have the meanings ascribed to them in the Award Agreement, unless specifically set forth otherwise herein. In addition, the following terms used in this Exhibit A shall have the meanings set forth below:
|
(1)
|
“ROTCE”
means the Company’s return on average tangible common stockholder’s equity and, for the purpose of this measure, equates to average Adjusted Net Income as a percentage of average Adjusted Tangible Common Equity for the Performance Period, adjusted to exclude special, unusual or non-recurring items consistent with the Company’s public disclosures in its quarterly earnings or other press releases.
|
(2)
|
“Adjusted Net Income”
means the Company’s after-tax net income from Continuing Operations applicable to common shareholders adjusted to exclude the impact during the Performance Period of (i) loss on debt extinguishments, (ii) the tax effected amortization of intangible assets, and (iii) other special, unusual or non-recurring items consistent with the Company’s public disclosures in its quarterly earnings or other press releases.
|
(3)
|
“Adjusted Tangible Common Equity”
means the Company’s common stockholder’s equity less goodwill and intangible assets, adjusted to exclude disallowed deferred tax assets.
|
(4)
|
“Comparison Group”
means the shares of common stock regularly traded on an applicable exchange of each of the companies in the KBW Nasdaq Bank Index as of January 1, 2018, listed below:
|
|
Bank of America Corp. (NYSE: BAC)
|
M&T Bank Corporation (NYSE: MTB)
|
|
Bank of New York Mellon Corp. (NYSE: BK)
|
New York Community Bancorp, Inc. (NYSE: NYCB)
|
|
BB&T Corporation (NYSE: BBT)
|
Northern Trust Corporation (Nasdaq: NTRS)
|
|
Capital One Financial Corp. (NYSE: COF)
|
People’s United Financial, Inc. (Nasdaq: PBCT)
|
|
Citigroup Inc. (NYSE: C)
|
PNC Financial Services Group Inc. (NYSE: PNC)
|
|
Citizens Financial Group (NYSE: CFG)
|
Regions Financial Corporation (NYSE: RF)
|
|
Comerica Incorporated (NYSE: CMA)
|
State Street Corp. (NYSE: STT)
|
|
Fifth Third Bancorp (Nasdaq: FITB)
|
SunTrust Banks, Inc. (NYSE: STI)
|
|
First Republic Bank (NYSE: FRC)
|
SVB Financial Group (Nasdaq: SIVB)
|
|
Huntington Bancshares Incorporated (Nasdaq: HBAN)
|
U.S. Bancorp (NYSE: USB)
|
|
JPMorgan Chase & Co. (NYSE: JPM)
|
Wells Fargo & Co. (NYSE: WFC)
|
|
KeyCorp (NYSE: KEY)
|
Zions Bancorporation (Nasdaq: ZION)
|
(5)
|
“Payout Percentage”
shall be the number expressed in the Performance Measure Factor Grid. The threshold Payout Percentage is % and the maximum Payout Percentage is %.
|
(6)
|
“Performance Measure Factor Grid”
means the chart in Paragraph (C) below that provides the applicable Payout Percentage based on the levels of the Performance Measures that have been achieved.
|
(7)
|
“Performance Measures”
means the performance measurements of ROTCE and TSR Provision used to determine the calculation of PSUs earned in accordance with this
Exhibit A
.
|
(8)
|
“Performance Period”
means the period from January 1, 2018 through December 31, 2020.
|
(9)
|
“Total Shareholder Return” or “TSR”
for the Company or any member of the Comparison Group is expressed as a percentage determined by dividing (A) (i) the average closing common stock price for the 20 consecutive trading days ending on the last trading day in the Performance Period, plus (ii) the sum of all dividends paid on the applicable common stock during the Performance Period assuming dividend reinvestment as of the ex-dividend date, minus (iii) the average closing common stock price for the 20 consecutive trading days immediately
|
a)
|
The TSR for any company in the Comparison Group will be negative one hundred percent (-100%) if that company: (i) files for bankruptcy, reorganization, or liquidation under any applicable chapter of the U.S. Bankruptcy Code; (ii) is the subject of an involuntary bankruptcy proceeding that is not dismissed within 30 days; (iii) is the subject of a stockholder approved plan of liquidation or dissolution; or (iv) ceases to conduct substantial business operations.
|
(10)
|
“Total Shareholder Return Adjustment Factor” or “TSR Adjustment Factor”
means a factor that can increase or decrease the applicable Payout Percentage by up to 20% but not to exceed the maximum Payout Percentage, based on the Company’s TSR as compared to the TSRs of the Comparison Group during the Performance Period.
|
(B)
|
In General
. The total number of Shares deliverable to the Participant shall be equal to (i) the Target Number of PSUs (or Pro-Rata Target Number of PSUs, if applicable) multiplied by the applicable Payout Percentage based on the specified levels of Performance Measures that have been achieved during the Performance Period as provided in the Performance Measure Factor Grid; (ii) the Target Awarded Shares in accordance with Section (C)(1), (D)(1), (D)(4), (D)(5) or (D)(6) of the Agreement, if applicable, or (iii) the Pro-Rata Awarded Shares in accordance with Section (D)(2) or (D)(3) of the Agreement, if applicable.
|
(1)
|
If the levels of Performance Measures attained falls between the amounts shown above, the applicable Payout Percentage will be determined by interpolation between the respective amounts shown above.
|
(2)
|
The
“Target Level”
for ROTCE is %, the
“Target Level”
for the TSR Adjustment Factor is %, and the
“Minimum Level”
for ROTCE is %.
|
(3)
|
If the Minimum Level for ROTCE is not met, the PSUs eligible to vest will be forfeited.
|
(4)
|
After the end of the Performance Period, the Committee will rank each member of the Comparison Group according to TSR. The Company’s TSR percentile will then be compared to TSRs of the Comparison Group, including the Company, to determine the TSR Adjustment Factor.
|
(D)
|
Committee Determination
. The Committee shall, in its sole discretion, determine the level of Performance Measures that have been satisfied during the Performance Period and the applicable Payout Percentage to be used to determine the number of Awarded Shares, if any, based on the application of the Performance Measure Factor Grid. The Committee may, in its sole discretion, adjust the Performance Measures and the Performance Measure Factor Grid to exclude the effect on satisfaction of the Performance Measures of any (i) corporate acquisition, divestiture or other discontinued operations, (ii) change in tax law or regulation or change in accounting principle under Generally Accepted Accounting Principles, (iii) item, event or occurrence that is extraordinary or unusual in nature or infrequent in occurrence, or (iv) other adjustment permissible under the Plan.
|
1.
|
Non-Competition following Retirement
. Following Participant’s Retirement through the Settlement Date, Participant shall
not
, without the Company Group’s prior written consent, engage directly or indirectly in any Competing Business whether as an employer, officer, director, owner, stockholder, employee, partner, member, joint venture or consultant. The Committee (or its designee) may, in its sole discretion, require Participant to submit on or prior to each Vesting Date an affidavit certifying that Participant has not breached this non-competition restriction, and may condition vesting and settlement of all unvested PSUs on the timely receipt of such affidavit. The geographic reach of this non-competition restriction shall be the territory which is co-extensive with the Company Group’s business and the Participant’s responsibilities in the last twenty-four (24) months of employment. Nothing in this non-competition restriction prevents Participant from owning not more than 2% of the equity of a publicly traded entity. For the avoidance of doubt, this non-competition restriction shall not apply to a termination of employment for any reason other than Participant’s Retirement. This provision does not apply to employees who, at the time of award or vesting, are assigned to a Company Group work location in a country, state or locality that prohibits the foregoing restrictions.
|
2.
|
Non-Solicitation of Customers and Clients
. During employment with the Company Group and for one year thereafter, the Participant shall
not
, directly or indirectly, (i) solicit for any Competing Business any client of the Company Group or any specifically identified prospective client of the Company Group, or (ii) cause a client or any specifically identified prospective client of the Company Group to terminate or diminish its business with the Company Group. These restrictions shall apply only to clients of the Company Group or specifically identified prospective clients of the Company Group which the Participant solicited, with which the Participant maintained a business relationship for the Company Group, or about which the Participant obtained Confidential Information on behalf of the Company Group, in the last twenty-four (24) months of employment with the Company Group. This provision does not apply to employees who, at the time of award or vesting, are assigned to a Company Group work location in a country, state or locality that prohibits the foregoing restrictions.
|
3.
|
Non-Solicitation of Employees.
During employment with the Company Group and for one year thereafter, the Participant shall
not
, directly or indirectly, (i) solicit, recruit, induce or otherwise encourage any Company Group employees to end their employment with the Company Group or to engage in any Competing Business; or (ii) hire or retain as an independent consultant/contractor, on behalf of any Competing Business, any person who was employed with the Company Group within the preceding six months.
|
4.
|
Definitions.
|
(a)
|
“
Competing Business
” means any person or entity that competes with the Company Group in the sale, marketing, production, distribution, research or development of Competing Products in the same markets.
|
(b)
|
“
Competing Products
” means any product or service in existence or under development that competes with any product or service of the Company Group about which the Participant obtained Confidential Information or for which the Participant provided advisory services or had sales, origination, marketing, production, distribution, research or development responsibilities in the last twenty-four (24) months of employment with the Company Group.
|
(c)
|
"
Confidential Information
" means both tangible and intangible information owned by CIT or a Third Party (as defined below) which is in print, audio, visual, digital, electronically-stored or any other form that (i) has been developed or acquired by the Company Group; (ii) constitutes a trade secret or is proprietary in nature; (iii) is not otherwise known publicly or to the Company Group’s competitors; and (iv) is kept confidential byte Company Group. Confidential Information includes, but is not limited to: Board of Director presentations and materials; business, financial, advertising or marketing opportunities, proposals, presentations, plans, budgets, strategies or methods; financial information including forecasts/presentations, budgets, data, financial statements and tax returns; financial management and accounting policies and procedures; risk, credit and pricing policies, procedures and terms; prices and rates; profit margins; secondary marketing and hedging models; loan, lease and other financial program applications and supporting documents and information; merger, acquisition, divestiture and other transaction information and documents; operations and procedure manuals, materials, policies and memoranda; software programs; source code; data models; production reports; security and proprietary technology; analyses; research and developments; know how; methodologies; designs; inventions; innovations; processes; patents; other business, financial or technical information, improvements, ideas and concepts, whether or not patentable or whether or not copyrightable; information classified as “Confidential” or “Restricted”; Confidential Information owned by or about CIT’s licensors, clients, customers, vendors, suppliers, franchisors, referral sources or other business partners or third parties (“Third Party” or “Third Parties”); and
|
“
Participant
”:
|
|
“
Date of Award
”:
|
|
“
Number of RSUs Granted
”:
|
|
(A)
|
Grant of RSUs
. The Company hereby grants to the Participant the Number of RSUs Granted, effective as of the Date of Award and subject to the terms and conditions of the Plan and this Award Agreement. Each RSU represents the unsecured right to receive one Share in the future following the vesting of the RSU in accordance with this Award Agreement. The Participant shall not be required to pay any additional consideration for the issuance of the Shares upon settlement of the RSUs.
|
(B)
|
Vesting and Settlement of RSUs
.
|
(1)
|
Subject to (A) the Participant’s continued employment with the Company and/or any Subsidiary or affiliate (the “
Company Group
”) from the Date of Award until the applicable Vesting Date (as defined below), (B) Section (B)(2) and (C) compliance with, and subject to, the terms and conditions of this Award Agreement, one-third (33 1/3%) of the RSUs shall vest on March 1, 2019, March 1, 2020, and March 1, 2021 (each a “
Vesting Date
”).
|
(2)
|
As promptly as practicable following the end of each fiscal year in the 2018 through 2020 “
Performance Period
” (each such fiscal year, a “
Measurement Year
”), the Committee shall determine whether the Company’s Capital Ratio (as defined below) met or exceeded the applicable minimum for well-capitalized banks as established by the Federal Reserve for the Measurement Year most recently completed (the “
Performance Requirement
”). If the Performance Requirement was not met for that Measurement Year, the Committee may cancel all or a portion of the RSUs that otherwise would have vested on the immediately following Vesting Date, after taking into account such factors as (i) the magnitude of the Capital Ratio below the minimum, (ii) the Participant’s degree of involvement (including the degree to which the Participant was involved in decisions that are determined to have contributed to a Capital Ratio below the minimum), (iii) the Participant’s performance and (iv) such other factors as deemed appropriate. Any such determination will be in the sole discretion of the Committee and will be final and binding. “
Capital Ratio
” means, with respect to each fiscal year, the Company’s Common Equity Tier 1 capital ratio, as shown on the Company’s consolidated financial statements for such fiscal year, but calculated excluding any special, unusual or non-recurring items as determined by the Committee in its sole discretion.
|
(3)
|
Each vested RSU shall be settled through the delivery of one Share within thirty (30) days following the applicable Vesting Date (a “
Settlement Date
”), provided that any fractional Share shall vest and be settled on the last Vesting Date and Settlement Date, respectively, and provided further that the Settlement Date may be delayed, in the sole discretion of the Committee and in accordance with applicable law (including Section 409A (as defined below)), if the Committee is considering whether Sections (B)(2) and/or (L) apply to the Participant.
|
(4)
|
The Shares delivered to the Participant on the applicable Settlement Date (or such date determined in accordance with Section (C) or (D)) shall not be subject to transfer restrictions and shall be fully paid, non-assessable and registered in the Participant’s name.
|
(5)
|
If, after the Date of Award and prior to the applicable Vesting Date, dividends with respect to Shares are declared or paid by the Company, the Participant shall be credited with, and entitled to receive, dividend equivalents in an amount, without interest, equal to the cumulative dividends declared or paid on a Share, if any, during such period multiplied by the number of unvested RSUs. Unless otherwise determined by the Committee, dividend equivalents paid in cash shall not be reinvested in Shares and shall remain uninvested. The dividend equivalents credited in respect of vested RSUs shall be paid in cash or Shares, as applicable, on the Settlement Date.
|
(6)
|
Except for Participants who are tax residents of Canada, in the sole discretion of the Committee and notwithstanding any other provision of this Award Agreement to the contrary, in lieu of the delivery of Shares, the RSUs and any dividend equivalents payable in Shares may be settled through a payment in cash equal to the Fair Market Value of the applicable number of Shares, determined on the applicable Vesting Date or, in the case of settlement in accordance with Section (C)(1) or (D), the date of the Participant’s “
Separation from Service
” (within the meaning of the Committee’s established methodology for determining “
Separation from Service
” for purposes of Section 409A) or the date of Disability, as applicable. Settlement under this Section (B)(6) shall be made at the time specified under Sections (B)(3), (B)(5), (C)(1), (C)(2) or (D), as applicable.
|
(C)
|
Separation from Service
.
|
(1)
|
If, after the Date of Award and prior to an applicable Settlement Date, the Participant incurs a Disability (as defined below) or a Separation from Service from the Company Group due to death, each RSU, to the extent unvested, shall vest immediately and shall settle through the delivery of one Share within thirty (30) days following the Participant’s Disability or Separation from Service due to death. The Participant (or the Participant’s beneficiary or legal representative, if applicable) shall also be entitled to receive all credited and unpaid dividend equivalents at the time the RSUs are settled in accordance with this Section (C)(1). “
Disability
” shall have the same meaning as defined in the Company’s applicable long-term disability plan or policy last in effect prior to the first date the Participant suffers from such Disability;
provided
,
however
, for a Participant that is a US taxpayer at any time during the period the RSUs vest and become settled hereunder and to the extent a “Disability” event does not also constitute a “Disability” as defined in Section 409A, such Disability event shall not constitute a Disability for purposes of this Section (C)(1).
|
(2)
|
If, after the Date of Award and prior to an applicable Settlement Date, the Participant incurs a Separation from Service initiated (i) by the Participant and at the time of such Separation from Service the Participant meets the conditions of Retirement (as defined below) and no grounds exist such that the Company could terminate the Participant for Cause, or (ii) by the Company without Cause (as defined below and including, for the avoidance of doubt, in connection with a sale of a business unit), and subject to the terms and conditions of the Plan and this Award Agreement, including Section (L) below, the RSUs (and any credited and unpaid dividend equivalents), to the extent unvested as of such Separation from Service, shall continue to vest and be settled on the applicable Vesting Date and Settlement Date in accordance with Sections (B)(1), (B)(2) and (B)(3) above, unless such continued vesting and settlement of RSUs (and dividend equivalents) following the Participant’s Separation from Service is prohibited or limited by applicable law and/or regulation. “
Retirement
” is defined as the Participant’s Separation from Service upon or after (A) attaining age 55 with at least 11 years of service with the Company Group, or (B) attaining age 60 with at least 6 years of service with the Company Group, in each case as determined in accordance with the Company Group’s policies and procedures.
“
Cause
” means any of the following: (i) the commission of a misdemeanor involving moral turpitude or a felony; (ii) the Participant’s act or omission that causes or may reasonably be expected to cause material injury to the Company Group, its vendors, customers, business partners or affiliates or that results or is intended to result in personal gain at the expense of the Company Group, its vendors, customers, business partners or affiliates; (iii) the Participant’s substantial and continuing neglect of his or her job responsibilities for the Company Group (including excessive unauthorized absenteeism); (iv) the Participant’s failure to comply with, or violation of, the Company Group’s Code of Business Conduct; (v) the Participant’s act or omission, whether or not performed in the workplace, that precludes the Participant’s employment with any member of the Company Group by virtue of Section 19 of the Federal Deposit Insurance Act; and (vi) the Participant’s violation of any federal or state securities or banking laws, any rules or regulations issued pursuant to such laws, or the rules and regulations of any securities or exchange or association of which the Participant or member of the Company Group is a member.
|
(3)
|
If, prior to an applicable Vesting Date, the Participant’s employment with the Company Group terminates for any reason other than as set forth in Section (C)(1), (C)(2) or (D), the unvested RSUs shall be cancelled immediately and the Participant shall immediately forfeit any rights to, and shall not be entitled to receive any payments with respect to, the RSUs including, without limitation, dividend equivalents pursuant to Section (B)(5).
|
(D)
|
Change of Control
.
|
(1)
|
Notwithstanding any provision contained in the Plan or this Award Agreement to the contrary, if a Change of Control occurs before the last day of the Performance Period, the Performance Requirement in Section (B)(2)
|
(2)
|
Notwithstanding any provision contained in the Plan or this Award Agreement to the contrary, if, prior to an applicable Settlement Date, a Change of Control occurs and within two years of such Change of Control the Participant incurs a Separation from Service (i) due to the Participant’s Retirement, (ii) initiated by the Company without Cause or (iii) initiated by the Participant for “Good Reason” (as defined below), the RSUs (and any credited and unpaid dividend equivalents), to the extent unvested, shall vest upon such Separation from Service and be settled within thirty (30) days following such Separation from Service, unless such accelerated vesting and settlement of RSUs (and dividend equivalents) following the Participant’s Separation from Service is prohibited or limited by applicable law and/or regulation. “
Good Reason
” shall mean, without the Participant’s consent, a material diminution of the Participant’s (x) base salary (except in the event of a compensation reduction applicable to the Participant and other employees of comparable rank and/or status), (y) the Participant 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 Participant has to commute to work by more than fifty miles, or (z) duties and responsibilities (except a temporary reduction while the Participant is physically or mentally incapacitated or a modification in the duties and/or responsibilities of the Participant and other employees of comparable rank and/or status following a Change of Control), provided, that a Separation from Service for Good Reason shall not occur unless (A) the Participant has provided the Company written notice specifying in detail the alleged condition of Good Reason within thirty (30) days of the occurrence of such condition; (B) the Company has failed to cure such alleged condition within ninety (90) days following the Company’s receipt of such written notice; and (C) if the Committee (or its designee) has determined that the Company has failed to cure such alleged condition, the Participant initiates a Separation from Service within five (5) days following the end of such 90-day cure period.
|
(E)
|
Transferability
. The RSUs are not transferable other than by last will and testament, by the laws of descent and distribution pursuant to a domestic relations order, or as otherwise permitted under Section 4.6 of the Plan.
|
(F)
|
Incorporation of Plan
. The Plan includes terms and conditions governing all Awards granted thereunder and is incorporated into this Award Agreement by reference unless specifically stated herein. This Award Agreement and the rights of the Participant hereunder are subject to the terms and conditions of the Plan, as amended from time to time and as supplemented by this Award Agreement, and to such rules and regulations as the Committee may adopt under the Plan. If there is any inconsistency between the terms of this Award Agreement and the terms of the Plan, the Plan’s terms shall supersede and replace the conflicting terms of this Award Agreement.
|
(G)
|
No Entitlements
.
|
(1)
|
Neither the Plan nor the Award Agreement confer on the Participant any right or entitlement to receive compensation, including, without limitation, any base salary or incentive compensation, in any specific amount for any future fiscal year (including, without limitation, any grants of future Awards under the Plan), nor impact in any way the Company Group’s determination of the amount, if any, of the Participant’s base salary or incentive compensation. This Award of RSUs made under this Award Agreement is completely independent of any other Awards or grants and is made at the sole discretion of the Company. The RSUs do not constitute salary, wages, regular compensation, recurrent compensation, pensionable compensation or contractual compensation for the year of grant or any prior or later years and shall not be included in, nor have any effect on or be deemed earned in any respect, in connection with the determination of employment-related rights or benefits under law or any employee benefit plan or similar arrangement provided by the Company Group (including, without limitation, severance, termination of employment and pension benefits), unless otherwise specifically provided for under the terms of such plan or arrangement or by the Company Group. The benefits provided pursuant to the RSUs are in no way secured, guaranteed or warranted by the Company Group.
|
(2)
|
The RSUs are awarded to the Participant by virtue of the Participant’s employment with, and services performed for, the Company Group. The Plan or the Award Agreement does not constitute an employment agreement. Nothing in the Plan or the Award Agreement shall modify the terms of the Participant’s employment, including, without limitation, the Participant’s status as an “at will” employee of the Company Group, if applicable.
|
(3)
|
Subject to any applicable employment agreement, the Company reserves the right to change the terms and conditions of the Participant’s employment, including the division, subsidiary or department in which the Participant is employed. None of the Plan or the Award Agreement, the grant of RSUs, nor any action taken or omitted to be taken under the Plan or the Award Agreement shall be deemed to create or confer on the Participant any right to be retained in the employ of the Company Group, or to interfere with or to limit in any way the right of the Company Group to terminate the Participant’s employment at any time. Moreover, the Separation from Service provisions set forth in Section (C) or (D), as applicable, only apply to the treatment of the RSUs in the specified circumstances and shall not otherwise affect the Participant’s employment relationship. By accepting this Award Agreement, the Participant waives any and all rights to compensation or damages in consequence of the termination of the Participant’s office or employment for any reason whatsoever to the extent such rights arise
|
(H)
|
No Rights as a Stockholder
.
The Participant will have no rights as a stockholder with respect to Shares covered by this Award Agreement (including voting rights) until the date the Participant or his nominee becomes the holder of record of such Shares on an applicable Settlement Date or as provided in Section (C) or (D), if applicable.
|
(I)
|
Securities Representation
. The grant of the RSUs and issuance of Shares upon vesting of the RSUs shall be subject to, and in compliance with, all applicable requirements of federal, state or foreign securities law. No Shares may be issued hereunder if the issuance of such Shares would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Shares may then be listed. As a condition to the settlement of the RSUs, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation.
|
(1)
|
He or she has been advised that he or she may be an “affiliate” within the meaning of Rule 144 under the Securities Act of 1933, as amended (the “
Act
”), and in this connection the Company is relying in part on his or her representations set forth in this section (I)(1); and
|
(2)
|
If he or she is deemed an affiliate within the meaning of Rule 144 of the Act, the Shares must be held indefinitely unless an exemption from any applicable resale restrictions is available or the Company files an additional registration statement (or a “re-offer prospectus”) with regard to such Shares and the Company is under no obligation to register the Shares (or to file a “re-offer prospectus”).
|
(3)
|
If he or she is deemed an affiliate within the meaning of Rule 144 of the Act, he or she understands that the exemption from registration under Rule 144 will not be available unless (i) a public trading market then exists for the Shares of the Company, (ii) adequate information concerning the Company is then available to the public, and (iii) other terms and conditions of Rule 144 or any exemption therefrom are complied with; and that any sale of the Shares may be made only in limited amounts in accordance with such terms and conditions.
|
(J)
|
Notices
. Any notice or communication given hereunder shall be in writing and shall be deemed to have been duly given when delivered in person or mailed by certified mail, postage and fees prepaid, or internationally recognized express mail service, as follows:
|
(K)
|
Transfer of Personal Data
.
In order to facilitate the administration of this Award, it will be necessary for the Company Group to collect, hold, and process certain personal information about the Participant. As a condition of accepting this Award, the Participant authorizes, agrees and unambiguously consents to the Company Group collecting, using, disclosing, holding and processing personal data and transferring such data to third parties (collectively, the “
Data Recipients
”) for the primary purpose of the Participant’s participation in, and the general administration of, the Plan and to the transmission by the Company Group of any personal data information related to the RSUs awarded under this Award Agreement, as required in connection with the Participant’s participation in the Plan (including, without limitation, the administration of the Plan) out of the Participant’s home country and including to countries with less data protection than the data protection provided by the Participant’s home country. This authorization and consent is freely given by the Participant. The Participant acknowledges that he/she has been informed that upon request, the Company will provide the name or title and contact information for an officer or employee of the Company Group who is able to answer questions about the collection, use and disclosure of personal data information.
|
(1)
|
The Data Recipients will treat the Participant’s personal data as private and confidential and will not disclose such data for purposes other than the management and administration of this Award and will take reasonable measures to keep the Participant’s personal data private, confidential, accurate and current.
|
(2)
|
Where the transfer is to a destination outside the country to which the Participant is employed, or outside the European Economic Area for Participants employed by the Company Group in the United Kingdom or Ireland, the Company shall take reasonable steps to ensure that the Participant’s personal data continues to be adequately protected and securely held. By accepting this Award, the Participant acknowledges that personal information about the Participant may be transferred to a country that does not offer the same level of data protection as the country in which the Participant is employed.
|
(L)
|
Cancellation; Recoupment; Related Matters.
|
(1)
|
The RSUs granted under this Agreement, and any Shares issued or any credited and unpaid dividend equivalents with respect to such Shares or other payments made in respect thereof, shall be subject to the CIT Group Inc. Recoupment Policy (“
Recoupment Policy
”) as the Company Group may amend from time to time, whether or not such Recoupment Policy is otherwise applicable to the Participant. By accepting the grant of RSUs under this Agreement, including the provisions of
Exhibit A
, the Participant agrees and consents to the Company Group’s application, implementation and enforcement of (a) the Recoupment Policy and (b) any provision of applicable law relating to cancellation, recoupment, rescission or payback of compensation and expressly agrees that the Company Group may take such actions as are necessary to effectuate the Recoupment Policy or applicable law without further consent or action being required by the Participant. To the extent that the terms of this Agreement and the Recoupment Policy conflict, the terms of the recoupment policy shall prevail.
|
(2)
|
Notwithstanding anything contained in the Plan or this Award Agreement to the contrary, to the extent that the Company is required by law to include any additional recoupment, recovery or forfeiture provisions to outstanding Awards, then such additional provisions shall also apply to this Award Agreement as if they had been included as of the Date of Award and in the manner determined by the Committee in its sole discretion.
|
(3)
|
The remedies provided for in this Award Agreement shall be cumulative and not exclusive, and the Participant agrees and acknowledges that the enforcement by the Company of its rights hereunder shall not in any manner impair, restrict or limit the right of the Company to seek injunctive and other equitable or legal relief under applicable law or the terms of any other agreement between the Company and the Participant.
|
(M)
|
Miscellaneous
.
|
(1)
|
It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Award Agreement, all of which shall be binding upon the Participant.
|
(2)
|
The Board may at any time, or from time to time, terminate, amend, modify or suspend the Plan, and the Board or the Committee may amend or modify this Award Agreement at any time;
provided
,
however
, that, except as provided herein, no termination, amendment, modification or suspension shall materially and adversely alter or impair the rights of the Participant under this Award Agreement, without the Participant’s written consent.
|
(3)
|
This Award Agreement is intended to comply with, or be exempt from, Section 409A of the Code and the regulations and guidance promulgated thereunder (“
Section 409A
”), and accordingly, to the maximum extent permitted, this Award Agreement shall be interpreted in a manner intended to be in compliance therewith. In no event whatsoever shall the Company Group be liable for any additional tax, interest or penalty that may be imposed on the Participant by Section 409A or any damages for failing to comply with Section 409A. If any provision of the Plan or the Award Agreement would, in the sole discretion of the Committee, result or likely result in the imposition on the Participant, a beneficiary or any other person of additional taxes or a penalty tax under Section 409A, the Committee may modify the terms of the Plan or the Award Agreement, without the consent of the Participant, beneficiary or such other person, in the manner that the Committee, in its sole discretion, may determine to be necessary or advisable to avoid the imposition of such penalty tax. Notwithstanding anything to the contrary in the Plan or the Award Agreement, to the extent that the Participant is a “
Specified Employee
” (within the meaning of the Committee’s established methodology for determining “
Specified Employees
” for purposes of Section 409A), payment or distribution of any amounts with respect to the RSUs that are subject to Section 409A will be made as soon as practicable following the first business day of the seventh month following the Participant’s Separation from Service from the Company Group or, if earlier, the date of the Participant’s death.
|
(4)
|
Delivery of the Shares underlying the RSUs or payment in cash (if permitted pursuant to Section (B)(6)) upon settlement is subject to the Participant satisfying all applicable federal, state, provincial, local, domestic and foreign taxes and other statutory obligations (including, without limitation, the Participant’s FICA obligation,
|
(5)
|
The Company may at any time place legends referencing any applicable federal, state or foreign securities law restrictions on all certificates representing Shares issued pursuant to this Award Agreement. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing Shares acquired pursuant to this Award Agreement in the possession of the Participant.
|
(6)
|
This Award Agreement shall be subject to all applicable laws, rules, guidelines and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required, or the Committee determines are advisable, including but not limited to any applicable laws or the rules, codes or guidelines of any statutory or regulatory body in any jurisdiction relating to the remuneration of any Participant (in each case as may be in force from time to time). The Participant agrees to take all steps the Company determines are necessary to comply with all applicable provisions of federal, state and foreign securities law in exercising his or her rights under this Award Agreement.
|
(7)
|
Nothing in the Plan or this Agreement should be construed as providing the Participant with financial, tax, legal or other advice with respect to the RSUs. The Company recommends that the Participant consult with his or her financial, tax, legal and other advisors to provide advice in connection with the RSUs.
|
(8)
|
All obligations of the Company under the Plan and this Award Agreement, with respect to the Awards, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
|
(9)
|
To the extent not preempted by federal law, this Award Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware.
|
(10)
|
This Award Agreement may be executed in one or more counterparts, all of which taken together shall constitute one contract.
|
(11)
|
The Participant agrees that the Company may, to the extent permitted by applicable law and as provided for in Section 4.5 of the Plan, retain for itself securities or funds otherwise payable to the Participant pursuant to this Award Agreement, or any other Award Agreement under the Plan, to satisfy any obligation or debt that the Participant owes the Company or its affiliates under any Award Agreement, the Plan or otherwise; provided that the Company may not retain such funds or securities and set off such obligations or liabilities until such time as they would otherwise be distributable to the Participant, and to the extent that Section 409A is applicable, such offset shall not exceed the maximum offset then permitted under Section 409A.
|
(12)
|
The Participant acknowledges that if he or she moves to another country during the term of this Award Agreement, additional terms and conditions may apply and as provided for in Section 4.10.2 of the Plan and the Company reserves the right to impose other requirements to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Award Agreement. The Participant agrees to sign any additional agreements or undertaking that may be necessary to accomplish the foregoing.
|
(13)
|
The Participant acknowledges that he or she has reviewed the Company Policies, as defined in the Recoupment Policy, understands the Company Policies and agrees to be subject to the Company Policies that are applicable to the Participant, including, without limitation, the Regulatory Credit Classifications, as defined in the Recoupment Policy, and any credit risk policies in effect from time to time.
|
(14)
|
The Participant acknowledges that the Company is subject to certain regulatory restrictions that may, under certain circumstances, prohibit the accelerated vesting and distribution of any unvested RSUs as a result of, or following, a Participant’s Separation from Service.
|
(15)
|
The Participant acknowledges that his or her participation in the Plan as a result of this Award Agreement is further good and valuable consideration for the Participant’s obligations under any applicable non-competition, non-solicitation, confidential information, inventions, developments, proprietary property or similar agreement in effect between the Participant and the Company.
|
(16)
|
Neither this Award Agreement or the Shares that may be awarded hereunder represent any right to the payment of earned wages, and the rights of the Participant with respect to any Shares remains fully contingent and subject to the vesting and other terms and conditions of this Award Agreement.
|
(17)
|
Any cash payment made pursuant to Section (B)(5) or (B)(6) of this Award Agreement shall be calculated, where necessary, by reference to the prevailing U.S. dollar exchange rate on the proposed payment date (as determined by the Committee in its sole discretion).
|
(N)
|
Acceptance of Award
. By accepting this Award of RSUs, the Participant is agreeing to all of the terms contained in this Award Agreement, including the non-competition and non-solicitation provisions attached hereto as
Exhibit A
and tax provisions attached hereto as
Exhibit B
(if applicable). The Participant may accept this Award by indicating acceptance by e-mail or such other electronic means as the Company may designate in writing or by signing this Award Agreement if the Company does not require acceptance by email or such other electronic means. If the Participant desires to refuse the Award, the Participant must notify the Company in writing. Such notification should be sent to CIT Group Inc., Attention: Senior Vice President, Compensation and Benefits, 1 CIT Drive, Livingston, New Jersey 07039, no later than thirty (30) days after the Date of Award. If the Participant declines the Award, it will be cancelled as of the Date of Award.
|
CIT Group Inc. and Subsidiaries Computation of Ratio of Earnings to Fixed Charges
(dollars in millions)
|
|||||||||||
|
|
|
|
|
|
||||||
|
Quarters Ended
|
||||||||||
Earnings:
|
March 31, 2018
|
|
December 31, 2017
|
|
March 31, 2017
|
||||||
Net income
|
$
|
97.0
|
|
|
$
|
(88.0
|
)
|
|
$
|
179.9
|
|
Provision (benefit) for income taxes - continuing operations
|
41.3
|
|
|
27.7
|
|
|
56.2
|
|
|||
(Income) loss from discontinued operations, net of taxes
|
6.7
|
|
|
5.2
|
|
|
(101.7
|
)
|
|||
Income from continuing operations, before provision (benefit) or income taxes
|
145.0
|
|
|
(55.1
|
)
|
|
134.4
|
|
|||
Fixed Charges:
|
|
|
|
|
|
||||||
Interest and debt expenses on indebtedness
|
180.5
|
|
|
168.7
|
|
|
163.1
|
|
|||
Interest factor: one-third of rentals on real and personal properties
|
3.8
|
|
|
3.9
|
|
|
3.6
|
|
|||
Total fixed charges for computation of ratio
|
184.3
|
|
|
172.6
|
|
|
166.7
|
|
|||
Total earnings before provision (benefit) for income taxes and fixed charges
|
$
|
329.3
|
|
|
$
|
117.5
|
|
|
$
|
301.1
|
|
Ratios of earnings to fixed charges
|
1.79x
|
|
|
0.68x
|
|
|
1.81x
|
|
|
/s/ Ellen R. Alemany
|
|
Ellen R. Alemany
|
|
Chairwoman and Chief Executive Officer CIT Group Inc.
|
|
/s/ John Fawcett
|
|
John Fawcett
|
|
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/ John Fawcett
|
|
John Fawcett
|
|
Executive Vice President and Chief Financial Officer CIT Group Inc.
|