CIT Reports Fourth Quarter 2012 Net Income of $207 Million ($1.03 Per Diluted Share); Pre-Tax Income of $334 Million Excluding Debt Redemption Charges
Full Year Net Loss of $592 Million ($2.95 Per Diluted Share) Including $1.5 Billion of Debt Redemption Charges; Pre-Tax Income of $1.0 Billion Excluding Debt Redemption Charges
Fourth Quarter Financial Highlights
- Grew Commercial Assets - Increased 8% from a year ago; fifth consecutive quarter of sequential growth;
- Significant New Business Activity - Funded volume of $3.1 billion; rose 41% sequentially and 6% from the year-ago quarter;
- Finance Margin Improved - Funding cost declines reflect benefit of debt redemption actions; portfolio yields remain stable;
- Credit Metrics Remain At Cyclical Lows -Non-Accrual balances further declined and net charge-offs remain at low levels;
- Expanded CIT Bank - Assets surpassed $12 billion; online deposits exceed $4.5 billion; originated over 95% of U.S. loan and lease volume.
NEW YORK--(BUSINESS WIRE)-- CIT Group Inc. (NYS: CIT) , a leading provider of financing and advisory services to small businesses and middle market companies, today reported net income of $207 million, $1.03 per diluted share, for the fourth quarter of 2012, improved from $36 million, $0.18 for the year-ago quarter. The current period includes net charges of $83 million related to the redemption of student loan asset-backed securities and certain senior unsecured notes, while the year-ago period included debt redemption charges of $150 million. Pre-tax income excluding debt redemption charges for the quarter was $334 million, up from $221 million in the year-ago quarter. There was a net loss for the year ending December 31, 2012 of $592 million ($2.95 per share), which included $1.5 billion of debt redemption charges, compared to net income of $15 million, ($0.07 per share) for the year ended December 31, 2011, which included $528 million of debt redemption charges.
"We made significant progress in advancing our corporate strategy in 2012," said John Thain, Chairman and Chief Executive Officer. "We grew commercial assets, diversified our funding mix, and expanded new business initiatives that further support our small business and middle market clients. We remain focused on positioning CIT for future growth and profitability as we drive operating efficiencies, prudently grow our assets, and expand CIT Bank."
In preparing the financial statements for the quarter and year ended December 31, 2012, management identified errors that were not material to any individual prior period, but determined that correcting these errors in the current period would have been material to the 2012 full year statement of operations. Therefore, CIT will revise its previously reported financial statements for the first three quarters of 2012, and for the years ended December 31, 2011 and 2010 for these and other previously disclosed out-of-period errors. The cumulative effect of these errors was to increase tangible book value (TBV) per common share by $0.04, which is reflected in the $39.61 TBV per share at December 31, 2012. Further information is provided in the "Prior Period Revisions" section and the Appendix. All prior period data in this release and in the Financial Data Package (which is available on our website at www.cit.com/investor) reflect the revised balances.
Summary of Fourth Quarter Financial Results
Fourth quarter results reflect increased business activity, continued positive portfolio performance, and the benefits of our liability restructuring and other balance sheet management actions. Pre-tax income was $252 million for the quarter and included net charges of $83 million related to debt redemptions, compared to pretax income of $71 million in the year-ago quarter, which included $150 million of debt redemption charges. Excluding these charges, pretax income was $334 million in the current quarter, improved from $221 million in the year-ago quarter and $176 million in the prior quarter. See the Non-GAAP disclosure table on page 19 for additional information.
Total assets at December 31, 2012 were $44.0 billion, up $0.3 billion from September 30, 2012, and down $1.3 billion from December 31, 2011. Commercial financing and leasing assets increased from prior periods to $30.2 billion, while consumer assets declined by approximately $600 million from September 30, 2012 and by over $2.6 billion from a year ago primarily due to the sale of student loans. Total loans of $20.8 billion increased nearly $1.0 billion from a year ago, and $0.5 billion sequentially. Operating lease equipment increased $0.4 billion from a year ago and $0.3 billion from September 30, 2012 to $12.4 billion, consisting primarily of aircraft and railcars. Cash and short-term investments increased to $7.6 billion from $7.2 billion at September 30, 2012.
Funded new business volume of $3.1 billion rose from both the prior and year-ago quarters with increased activity levels from the year-ago quarter in all segments except Transportation Finance, which had an elevated number of aircraft deliveries in the year-ago period. Trade Finance factoring volume was $6.9 billion, up from the third quarter of 2012, in line with seasonal trends, and essentially unchanged from the prior-year quarter.
Net finance revenue1 was $312 million and reflects generally stable yields and improvements in funding cost that resulted from the repayment and/or refinancing of high cost debt and increased proportion of deposit funding. The current period was also impacted by the redemption of debt secured by student loans and certain other senior unsecured notes. Average earning assets were $32.3 billion in the fourth quarter, essentially unchanged from the prior quarter and down from $33.8 billion in the year-ago quarter due primarily to student loan sales. Average commercial earning assets of $28.4 billion increased from both comparative periods. Net finance revenue as a percentage of average earning assets ("finance margin") was 3.86% in the fourth quarter, improved from 1.09% in the prior-year quarter and -1.60% in the prior quarter. Excluding net FSA accretion, debt redemption charges, and accelerated original issue discount (OID) on debt extinguishment related to the total return swap facility (TRS), finance margin was 3.63%, improved from 2.02% in the year-ago quarter and 2.95% in the prior quarter. These improvements were driven primarily by lower funding costs, and the reduction of low yielding assets.
Other income of $172 million declined from $206 million in the prior-year quarter primarily due to lower gains on loan sales, and increased $85 million sequentially as the higher counterparty receivable accretion that resulted from sales of student loans, gains on assets sold, and recoveries on loans charged off prior to emergence were only partially offset by a higher level of impairment on assets held for sale. Factoring commissions of $32 million were unchanged from a year ago and decreased slightly from the prior quarter.
Operating expenses were $232 million, up from $222 million in the prior-year quarter but down sequentially. Excluding restructuring costs, operating expenses were $220 million in the current period compared to $217 million in the prior-year quarter and $230 million in the prior quarter. The current period includes a $10 million recovery of legal fees that resulted from a loan work-out related settlement as well as several other items that essentially offset each other in aggregate but impacted compensation and benefits and technology expenses. Headcount at December 31, 2012 was approximately 3,560 compared to 3,530 a year ago and down from 3,630 at September 30, 2012.
The provision for income taxes in the fourth quarter was $44 million, higher than both the year-ago and prior quarters, and is primarily related to the changes in the geographic mix of international earnings.
Credit and Allowance for Loan Losses
Portfolio credit quality trends remained stable with credit metrics at cyclical lows as non-accrual loans declined both sequentially and from the prior-year, and net charge-offs remained at low levels.
Net charge-offs were $17 million, or 0.34% as a percentage of average finance receivables, versus $24 million (0.45%) in the year-ago quarter and $18 million (0.36%) in the prior quarter. In our commercial segments, net charge-offs were 0.41% of average finance receivables, compared to 0.62% in the prior year quarter and 0.44% in the prior quarter. Net charge-off comparisons to both prior periods reflected improvements in Trade Finance and Transportation Finance partially offset by increases in Corporate Finance.
Net charge-offs do not reflect recoveries of loans charged off pre-emergence and loans charged off prior to transfer to held for sale. Recoveries on these loans are recorded in other income and totaled $17 million, $30 million and $9 million for the current quarter, the year-ago quarter and the prior quarter, respectively.
The provision for credit losses was essentially zero in the current quarter, unchanged from the prior quarter and improved from $16 million in the year-ago quarter, as reserve reductions offset net charge-offs in the second half of 2012. These favorable trends reflect the overall improvement in credit metrics, most notably the decline in net charge-offs.
Non-accrual loans declined to $332 million, or 1.59% of finance receivables, at December 31, 2012 from $702 million (3.53%) at December 31, 2011 and $412 million (2.02%) at September 30, 2012. Non-accrual loans as a percentage of finance receivables in the commercial segments were 1.93% at December 31, 2012, improved from 4.61% at December 31, 2011 and 2.48% at September 30, 2012. The sequential decline was driven by Corporate Finance and Trade Finance segments, reflecting both repayments of loans and loans returned to accrual status.
The allowance for loan losses, which relates entirely to the commercial portfolio, was $379 million at December 31, 2012, or 1.82% of total finance receivables, compared to $408 million (2.05%) at December 31, 2011 and $398 million (1.95%) at September 30, 2012. As a percentage of the commercial portfolio, the allowance for loan losses was 2.21% at December 31, 2012, compared to 2.68% at December 31, 2011 and 2.39% at September 30, 2012. This decline reflects improved portfolio credit quality, including the continued replacement of lower credit quality legacy assets with new origination volume. Specific reserves were $45 million at December 31, 2012, down from $55 million both a year ago and at September 30, 2012, as charge-offs exceeded additions to specific reserves for both the quarter and the year.
Capital and Funding
Preliminary Tier 1 and Total Capital ratios at December 31, 2012 were 16.2% and 17.0%, respectively, down modestly from 16.7% and 17.5%, respectively, at September 30, 2012. Preliminary risk-weighted assets totaled $48.6 billion at December 31, 2012, compared to $46.0 billion at September 30, 2012, and include the impact of both the recently announced order for ten Airbus A350s and the commitment to purchase a commercial loan portfolio. Book value per share at December 31, 2012 was $41.49, compared to $40.37 at September 30, 2012 and $44.27 at December 31, 2011. Tangible book value per share at December 31, 2012 was $39.61, improved from $38.47 at September 30, 2012 but down from $42.23 at December 31, 2011.
Cash and short-term investment securities totaled $7.6 billion at December 31, 2012, up $366 million from the prior-quarter and down approximately $800 million from December 31, 2011, and was comprised of $6.8 billion of cash and $0.8 billion of short-term investments. Cash and short-term investment securities at December 31, 2012 consisted of $2.5 billion related to the bank holding company, $3.4 billion at CIT Bank, $0.5 billion at operating subsidiaries and $1.2 billion in restricted balances. We had approximately $1.9 billion of unused and committed liquidity under a $2 billion revolving credit facility at December 31, 2012.
During the fourth quarter, we completed several transactions to diversify our funding sources and improve future profitability. These transactions included:
- The issuance of $1.5 billion of deposits, of which approximately 75% were originated through online channels. (Discussed further in CIT Bank below.)
- The sale of approximately $550 million of student loans in CIT Bank, most of which served as collateral for, and the proceeds of which were used to redeem, approximately $515 million in asset-backed securities (ABS) funded through an existing TRS. In addition, approximately $480 million in principal amount of ABS issued by a student lending securitization entity were redeemed at par and substantially all of the student loans used as collateral were refinanced through the existing TRS. (See "Consumer" below for the income statement impact of these transactions.)
- The funding of five Airbus aircraft under our existing European Export Credit Agency (ECA) facility for total proceeds of approximately $170 million.
- The redemption at par of approximately $18 million in principal amount of senior unsecured notes issued under CIT's pre-reorganization InterNotes retail note program.
- A new $208 million collateralized loan obligation (CLO) backed by a portfolio of Corporate Finance loans that was funded through the TRS.
As a result of these actions, we made further progress towards our long term targeted funding mix. At December 31, 2012, deposits represented 31% of our funding, with secured and unsecured borrowings comprising 32% and 37% of the funding mix, respectively. The weighted average coupon rate on outstanding deposits and long-term borrowings was 3.18% at December 31, 2012, improved from 3.25% at September 30, 2012 and 4.69% at December 31, 2011.
The following table details the impact on each segment from FSA accretion associated with accelerated debt repayment. The segment commentary that follows is focused on segment results excluding this impact.
|Impacts of FSA Accretion Associated With Accelerated Debt Repayment on Pre-tax Income (Loss) by Segment|
|Quarter Ended December 31, 2012|
|Pre-tax Income (Loss) - Reported||$||104.8||$||168.9||$||21.2||$||46.8||$||(50.9||)|
|Accelerated FSA Net Discount/(Premium) on Debt Extinguishments and Repurchases||1.3||9.7||0.3||1.1||121.5|
|Accelerated OID on debt extinguishment related to the TRS facility||-||(6.9||)||-||
|Pre-tax Income (Loss) - Adjusted(1)||
|Quarter Ended September 30, 2012|
|Pre-tax Income/(Loss) - Reported||$||(23.6||)||$||(94.4||)||$||(3.2||)||$||(47.6||)||$||(6.9||)|
|Accelerated FSA Net Discount/(Premium) on Debt Extinguishments and Repurchases||69.8||229.1||16.1||59.1||12.1|
|Pre-tax Income (Loss) - Adjusted(1)||$||46.2||$||134.7||$||12.9||$||11.5||$||5.2|
|Quarter Ended December 31, 2011|
|Pre-tax Income - Reported||$||166.1||$||22.7||$||8.6||$||30.0||$||(109.4||)|
|Accelerated FSA Net Discount/(Premium) on Debt Extinguishments and Repurchases||13.8||28.7||2.7||10.2||89.9|
|Pre-tax Income (Loss) - Adjusted(1)||$||179.9||$||51.4||$||11.3||$||40.2||$||
|(1)||Adjusted means excluding "accelerated FSA net discount/(premium) on debt extinguishments and repurchases" for each period presented and accelerated OID on debt extinguishment related to the TRS facility that occurred during the 2012 fourth quarter.|
Excluding accelerated FSA interest expense, pre-tax earnings decreased significantly from the prior-year quarter, primarily due to lower non-spread revenue as the year-ago quarter included significant gains on loan sales. The $60 million sequential quarter increase is attributable to benefits from net FSA accretion, lower funding costs, higher asset and investment sales gains and proceeds from a settlement of a loan charged off prior to emergence. Gains on asset and investment sales totaled $23 million in the current quarter, down from $91 million in the year-ago quarter and up from $12 million in the prior quarter.
Financing and leasing assets grew $1.1 billion from December 31, 2011, and $0.3 billion from September 30, 2012, to $8.3 billion. New funded loan volume increased approximately 60% from the both the year-ago quarter and prior quarter to $1.5 billion. CIT Bank originated over 90% of U.S. funded volume this quarter, up from 69% in the year-ago quarter.
Credit performance remains strong. The provision for credit losses was a benefit of $1 million in the current quarter, compared to a benefit of $22 million in the prior quarter and a cost of $10 million in the year-ago quarter. Non-accrual loans declined to $212 million from $256 million at September 30, 2012 and $498 million a year ago, and net charge-offs were $14 million (0.72% of average finance receivables), up from the low levels in both the year-ago and prior quarters.
As previously announced, at December 31, 2012 CIT Bank agreed to acquire $1.3 billion of commercial loan commitments (of which approximately $800 million was outstanding), the purchase of which should be substantially completed during the first quarter of 2013.
Excluding accelerated FSA interest expense and accelerated OID on debt extinguishment related to the TRS facility, pre-tax earnings rose substantially from both the year-ago and prior quarters, primarily reflecting asset growth and lower funding and credit costs. Equipment utilization remained strong with over 99% of commercial air and 98% of rail equipment on lease or under a commitment at December 31, 2012.
Financing and leasing assets grew approximately $0.9 billion from December 31, 2011, and $0.2 billion from September 30, 2012, to $14.2 billion. New business volume of $0.7 billion reflects the addition of seven aircraft and over 1,500 railcars to our operating lease portfolio, and over $200 million of new loans. All of the current quarter's loan volume and substantially all of the rail volume was originated by CIT Bank. All but two of the 15 aircraft scheduled for delivery in 2013 and over 98% of the approximately 7,000 railcars scheduled for delivery in 2013 and 2014 have lease commitments. In December 2012 we ordered ten A350 aircraft from Airbus with deliveries in 2019 and 2020.
Excluding accelerated FSA interest expense, pre-tax earnings nearly doubled from the year-ago quarter, and rose 67% sequentially primarily due to lower funding and credit costs. Factoring volume was $6.9 billion, essentially unchanged from the year-ago quarter and up 8% sequentially due to seasonal trends. Factoring commissions of $32.2 million were similarly unchanged from the year-ago quarter, but declined slightly from the prior quarter primarily due to business mix.
Credit metrics remain favorable. Non-accrual balances decreased substantially from a year ago, primarily due to accounts returning to accrual status and reductions in exposures, and also decreased substantially from September 30, 2012. There was a modest net recovery in the current quarter, compared to $6 million of net charge-offs in the year-ago quarter and no net-charge-offs in the prior quarter.
Excluding accelerated FSA interest expense, pre-tax earnings increased nearly 20% from the year-ago quarter primarily due to higher net finance revenue from improved funding costs and higher other income, which were partially offset by reduced net FSA accretion and higher credit and operating costs. The significant sequential quarter increase reflected higher other income, higher net finance revenue and lower credit and operating costs. The improvement in other income reflected a gain of approximately $14 million related to the previously announced sale of our Dell Europe operating platform to Dell.
Financing and leasing assets grew to $5.4 billion, representing increases of 4% from September 30, 2012 and 8% from a year ago. We funded $0.9 billion of new business volume for the fourth quarter, an increase of 21% from the year-ago quarter and 23% sequentially. Essentially all U.S. funded volume in the current quarter was originated by CIT Bank.
Non-accrual loans declined modestly from both a year ago and sequentially to $72 million (1.49% of finance receivables). Net charge-offs of $5 million declined from $10 million in the prior quarter but rose from $2 million in the year-ago quarter.
Excluding accelerated FSA interest expense and accelerated OID on debt extinguishment related to the TRS facility, pre-tax earnings rose both sequentially and from the year-ago quarter, primarily reflecting gains on asset sales.
As mentioned above, CIT sold approximately $550 million in student loans that were in held for sale as of September 30, 2012 at a $16 million gain to carrying value. The proceeds of the sale were used to redeem the associated ABS, which decreased fourth quarter 2012 interest expense by approximately $6 million as a $40 million increase in interest expense from the acceleration of FSA discount was offset by $46 million in reimbursement of OID related to the TRS. In addition, CIT redeemed approximately $480 million in principal amount of ABS issued by a student lending securitization entity, at par, which increased fourth quarter 2012 interest expense by $81 million due to the acceleration of FSA discount accretion. These actions in aggregate increased interest expense by $76 million and increased other income by $16 million.
At December 31, 2012, the student loan portfolio totaled approximately $3.7 billion and was funded through securitizations.
Corporate and Other
Certain items are not allocated to operating segments and are included in Corporate and Other, including unallocated interest expense, primarily related to corporate liquidity costs, accelerated FSA discount accretion, prepayment penalties and restructuring charges. Accelerated debt FSA discount accretion totaled $1 million in the current quarter, $7 million in the year-ago quarter, and $68 million in the prior quarter. The year-ago quarter also included prepayment penalties of $9 million, of which there were none in 2012, which were offset by $12 million in gains associated with debt extinguishments, while the prior quarter had $17 million of costs associated with debt extinguishment and no prepayment penalties. The loss on debt extinguishments reflects repayments of Series C Notes in the third quarter of 2012, while gains were recognized in the fourth quarter of 2011 on repurchases of Series A Notes. Operating expenses included restructuring charges of $12 million in the current quarter, compared to $5 million in each of the year-ago and prior quarters.
Lending and leasing assets grew during the quarter reflecting new business volume from all commercial segments. The Bank funded $2 billion of new business volume in the current quarter, which represented nearly all of the new U.S. volumes for Corporate Finance, Transportation Finance and Vendor Finance. Funded volumes were up 83% from the year-ago quarter and 47% sequentially.
Total assets were $12.2 billion, up from $9.0 billion at December 31, 2011 and $11.6 billion at September 30, 2012. Commercial loans totaled $8.0 billion, up from $3.9 billion at December 31, 2011 and $6.8 billion at September 30, 2012. Operating lease equipment of $649 million, primarily railcars, increased from $31 million at December 31, 2011 and $456 million at September 30, 2012. During the quarter, CIT Bank sold approximately $550 million of its remaining portfolio of student loans, which were held for sale. Proceeds of the sale were used to redeem the associated ABS funding. Cash was $3.4 billion at December 31, 2012, up from $2.5 billion at December 31, 2011 and down from $3.6 billion at September 30, 2012. CIT Bank's preliminary Total Capital ratio was 22.8% and the Tier 1 Leverage ratio was 20.2% at December 31, 2012.
Total deposits at quarter-end were $9.6 billion, up from $6.1 billion at December 31, 2011 and $8.6 billion at September 30, 2012. During the fourth quarter, CIT Bank placed over $1.5 billion of deposits at an average rate of approximately 1.1%. The average term of new CDs issued was over three years. Deposits originated though our online bank (www.BankOnCIT.com), which was launched during the fourth quarter of 2011, surpassed $4.5 billion.
Full Year 2012 Results
CIT's 2012 results reflect progress on our strategic priorities, which included: growth in our commercial businesses, eliminating high cost debt, improving economic profitability, and expanding the role of CIT Bank both in asset origination and funding capabilities.
The net loss for the year was $592 million, $2.95 per diluted share, compared to net income of $15 million ($0.07 per share) in 2011. The net loss resulted from approximately $1.5 billion of accelerated FSA and other charges related to over $15 billion of debt redemptions. The pre-tax loss for the year was $455 million, compared to pre-tax income of $178 million in 2011, and was attributable to the same items. Excluding accelerated FSA, debt redemption charges, and accelerated OID on debt extinguishment related to the TRS facility pre-tax income improved to $1.0 billion from $707 million in the prior year.
These improved results reflect significant declines in borrowing and credit costs that more than offset the impact of lower earning asset levels, lower gains from asset sales, lower counterparty receivable accretion, and reduced recoveries on pre-emergence charge-offs (recorded in other income).
Total financing and leasing assets decreased by approximately $340 million to $33.9 billion, which resulted from the sale of over $2.0 billion of liquidating government-guaranteed student loans. Commercial financing and leasing assets increased by over $2.3 billion to $30.2 billion as a 23% increase in commercial new business volume was partially offset by portfolio collections.
Portfolio quality improved. Net charge-offs of $74 million declined 72% from $265 million in 2011, essentially due to improvement in Corporate Finance. Net charge-offs in the commercial segments were 0.46%, down significantly from 1.68% in 2011, with the most notable improvements in Corporate Finance and Trade Finance. Non-accrual balances declined over 50% to $332 million at December 31, 2012 from $702 million a year ago. The provision for credit losses was $52 million, down from $270 million in 2011 reflecting improved credit metrics.
During 2012 CIT eliminated over $15 billion in high cost debt and grew the deposit base to 31% of total funding from 19% a year ago. These and other funding initiatives reduced our weighted average coupon rates on outstanding deposits and long-term borrowings from 4.69% at December 31, 2011 to 3.18% at December 31, 2012.
CIT continued to advance the growth and diversification of CIT Bank during 2012. CIT Bank funded over 90% of total U.S. loan and lease volume in 2012, up from 72% in 2011. Total assets at the bank increased 36% to $12.2 billion and CIT Bank ended 2012 with a Total Capital Ratio of nearly 23%. Deposits grew by 57% during 2012 to $9.6 billion, of which nearly half were from our online bank.
Prior Period Revisions
In preparing its quarterly financial statements for the first three quarters of 2012, the Company discovered, corrected and, in most cases, disclosed in those quarters immaterial errors that impacted prior periods. Additional out-of-period errors were identified in the fourth quarter. These additional out-of-period errors were individually and in the aggregate not material to the fourth quarter results but, when combined with the other out-of-period errors previously identified this year, were determined by management to be material to the full year 2012 results. Accordingly, management has revised in this release, and will revise in subsequent quarterly filings on Form 10-Q and its 2012 Form 10-K, its previously reported financial statements for 2010, 2011 and the first three quarters of 2012.
The cumulative effect of these revisions was to increase TBV by $8 million. As a result of these revisions, the net loss for the quarters ended September 30 and March 31, 2012 was decreased by $5.7 million and $19.5 million, respectively, and the net loss for the quarter ended June 30, 2012 was increased by $2.2 million, from our previously reported amounts. As a result of our adoption of fresh start accounting, the recognition of amounts relating to periods prior to 2010 resulted in a corresponding $15 million increase to goodwill.
Tables reflecting the previously reported balances, required adjustments and revised amounts impacting the income statements and balance sheets, along with descriptions of significant adjustments are included in the accompanying tables. The revised financial statements and metrics are also included in the Financial Data Package, which is available on our website at www.cit.com/investor .
See attached tables for financial statements and supplemental financial information.
Conference Call and Webcast
Chairman and Chief Executive Officer John A. Thain and Chief Financial Officer Scott T. Parker will discuss these results on a conference call and audio webcast today, January 29, 2013, at 8:00 a.m. (ET). Interested parties may access the conference call live by dialing 888-317-6003 for U.S., 866-284-3684 for Canadian callers or 412-317-6061 for international callers and reference access code "0426420" or access the audio webcast at cit.com/investor. An audio replay of the call will be available until 11:59 p.m. (EST) on February 12, 2013, by dialing 877-344-7529 for U.S. callers or 412-317-0088 for international callers with the access code 10023326, or at cit.com/investor.
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Founded in 1908, CIT (NYS: CIT) is a bank holding company with more than $33billion in financing and leasing assets. A member of the Fortune 500, it provides financing and leasing capital and advisory services to its clients and their customers across more than 30 industries. CIT maintains leadership positions in small business and middle market lending, factoring, retail finance, aerospace, equipment and rail leasing, and global vendor finance. CIT also operates CIT Bank (Member FDIC), its primary bank subsidiary, which, through its online bank BankOnCIT.com, offers a suite of savings options designed to help customers achieve a range of financial goals. cit.com
This press release contains forward-looking statements within the meaning of applicable federal securities laws that are based upon our current expectations and assumptions concerning future events, which are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. The words "expect," "anticipate," "estimate," "forecast," "initiative," "objective," "plan," "goal," "project," "outlook," "priorities," "target," "intend," "evaluate," "pursue," "commence," "seek," "may," "would," "could," "should," "believe," "potential," "continue," or the negative of any of those words or similar expressions is intended to identify forward-looking statements. All statements contained in this press release, other than statements of historical fact, including without limitation, statements about our plans, strategies, prospects and expectations regarding future events and our financial performance, are forward-looking statements that involve certain risks and uncertainties. While these statements represent our current judgment on what the future may hold, and we believe these judgments are reasonable, these statements are not guarantees of any events or financial results, and our actual results may differ materially. Important factors that could cause our actual results to be materially different from our expectations include, among others, the risk that CIT is unsuccessful in refining and implementing its strategy and business plan, the risk that CIT is unable to quickly react to and address key business and regulatory issues, the risk that CIT is delayed in transitioning certain business platforms to CIT Bank and may not succeed in developing a stable, long-term source of funding, and the risk that CIT continues to be subject to liquidity constraints and higher funding costs. We describe these and other risks that could affect our actual results in Item 1A, "Risk Factors", of our latest Annual Report on Form 10-K , as supplemented in our latest Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission. Accordingly, you should not place undue reliance on the forward-looking statements contained in this press release. These forward-looking statements speak only as of the date on which the statements were made. CIT undertakes no obligation to update publicly or otherwise revise any forward-looking statements, except where expressly required by law.
Net finance revenue and net operating lease revenue are non-GAAP measurements used by management to gauge portfolio performance. "Pre-FSA" is non-GAAP and provides the user with additional data that is more comparable to historical and peer disclosures. Pre-tax income excluding net fresh-start accounting accretion and debt redemption charges is a non-GAAP measurement used by management to compare period over period operating results. Tangible book value and tangible book value per share are non-GAAP metrics to analyze banks.
1 Net finance revenue and net operating lease revenue are non-GAAP measures. See "Non-GAAP Measurements" at the end of this press release and page 19 for reconciliation of non-GAAP to GAAP financial information.