Form 8-K CIT GROUP INC For: Apr 28

UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

 

 

Pursuant to Section 13 or 15(d) of the

 

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 28, 2016 (April 28, 2016)

CIT GROUP INC.

 

(Exact name of registrant as specified in its charter)

 

Delaware	001-31369	65-1051192
(State or other	(Commission	(IRS Employer
jurisdiction of	File Number)	Identification No.)
incorporation)

 

11 West 42^nd Street

 

New York, New York 10036

 

(Address of registrant's principal executive office)

Registrant's telephone number, including area code: (212) 461-5200

 

 

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2 – Financial Information

Item 2.02. Results of Operations and Financial Condition.

This Current Report on Form 8-K includes as an exhibit a press release, dated April 28, 2016, reporting the financial results of CIT Group Inc. (the “Company”) as of and for the quarter ended March 31, 2016. The press release is attached as Exhibit 99.1. This press release includes certain non-GAAP financial measures. A reconciliation of those measures to the most directly comparable GAAP measures is included as a table to the press release. The information furnished under this Item 2.02, including Exhibit 99.1, shall be considered filed for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Section 7 – Regulation FD

Item 7.01. Regulation FD Disclosure.

In addition, this Form 8-K includes a copy of the Company’s presentation to analysts and investors of its First Quarter 2016 Financial Results for the quarter ended March 31, 2016, which is attached as Exhibit 99.2. The information included in Exhibit 99.2 shall not be considered filed for purposes of the Exchange Act. The Company also provides supplementary financial information on its website, which is not incorporated by reference in this Form 8-K.

Section 9 – Financial Statements and Exhibits

Item 9.01.   Financial Statements and Exhibits.

 

(d)

Exhibits.

 

	99.1	Press release issued by CIT Group Inc. on April 28, 2016 reporting its financial results as of and for the quarter ended March 31, 2016.
	99.2	Presentation by CIT Group Inc. on April 28, 2016 regarding its First Quarter 2016 Financial Results.

Forward-Looking Statements

This Form 8-K 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 Form 8-K, 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 implementing its strategy and business plan, the risk that CIT is unable to react to and address key business and regulatory issues, the risk that CIT is unable to achieve the projected revenue growth from its new business initiatives or the projected expense reductions from efficiency improvements, and the risk that CIT becomes subject to liquidity constraints and higher funding costs. We describe these and other risks that could affect our results in Item 1A, “Risk Factors,” of our latest Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the Securities and Exchange Commission. Accordingly, you should not place undue reliance on the forward-looking statements contained in this Form 8-K. 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.

 

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	CIT GROUP INC.
	(Registrant)
	By:	/s/ E. Carol Hayles
		E. Carol Hayles
		Executive Vice President & Chief Financial Officer

Dated: April 28, 2016

 

 

 

 

Exhibit 99.1

 

1 

 

 

FOR IMMEDIATE RELEASE

 

CIT REPORTS FIRST QUARTER 2016 NET INCOME OF $147 MILLION ($0.73 PER DILUTED SHARE)

INCOME FROM CONTINUING OPERATIONS OF $152 MILLION ($0.75 PER DILUTED SHARE)

 

 

• Advanced Portfolio Optimization – Sold U.K. platform, Commercial Air separation and remaining Non-Strategic Portfolio exits progressing; transferred international business air assets to held for sale;

• Grew Commercial Portfolio - Financing and leasing assets in Commercial Banking were up 2% from the prior quarter;

 

• Maintained Strong Capital Ratios – Common Equity Tier 1 of 13.1% and Total Capital Ratio of 13.7%

 

NEW YORK, NY – April 28, 2016 – CIT Group Inc. (NYSE: CIT) cit.com, a leading provider of commercial lending and leasing services, today reported net income of $147 million, $0.73 per diluted share for the first quarter of 2016, compared to net income of $104 million, $0.59 per diluted share, for the year-ago quarter, which reflects results prior to the acquisition of OneWest Bank. Income from continuing operations for the first quarter was $152 million, $0.75 per diluted share, compared to $104 million, $0.59 per diluted share in the year-ago quarter.

 

“Since I recently became CEO and defined our strategy to become a leading national middle market bank, our team has been very focused on executing on our plan to improve returns as we grow our core businesses and maintain strong risk management practices,” said Ellen Alemany, Chief Executive Officer.

 

“This year we expect to complete the separation of Commercial Air and other portfolio optimization initiatives, integrate the remaining OneWest Bank systems, build out deposit and commercial treasury services capabilities, execute on initiatives to reduce operating expenses and return excess capital to shareholders.”

 

Summary of First Quarter Financial Results from Continuing Operations

All references in this section relate to continuing operations and therefore do not include any of the assets or results of operations of the discontinued operations.

On August 3, 2015, CIT acquired IMB HoldCo LLC, the parent company of OneWest Bank, which impacts the comparability of current results to prior periods. The current and prior quarters reflect a full quarter of OneWest Bank’s results of operations while the prior-year period does not include any results from OneWest Bank.

Selected Financial Highlights (Continuing Operations)

														Change from:
		1Q16				4Q15				1Q15				Prior Quarter*				Prior Year*
($ in millions, except per share data)
Pre-tax income		$	204			$	141			$	148			$	63			$	57
Net income		$	152			$	151			$	104			$	1			$	48
Diluted earnings per share (EPS)		$	0.75			$	0.75			$	0.59			$	(0.00	)		$	0.16
Pre-tax return on average earning assets (ROAEA)			1.38	%			0.95	%			1.41	%			0.43	%			-0.03	%
Return on average earning assets (ROAEA)			1.02	%			1.02	%			0.99	%			0.00	%			0.03	%
Adjusted return on tangible common (ROTCE) equity			7.08	%			7.08	%			5.26	%			0.00	%			1.82	%
Net finance margin			3.74	%			3.57	%			3.23	%			0.16	%			0.51	%
Net efficiency ratio			49.2	%			53.3	%			57.1	%			-4.1	%			-7.9	%
Tangible book value per share (TBVPS)		$	48.39			$	47.77			$	46.89			$	0.62			$	1.50
CET 1 Ratio(1)			13.1	%			12.7	%			14.1	%			0.4	%			-1.0	%
Total Capital Ratio(1)			13.7	%			13.2	%			14.8	%			0.5	%			-1.1	%
Net charge-offs  as % of AFR			0.65	%			0.40	%			0.43	%			0.25	%			0.22	%
Allowance for loan losses as % of finance receivables			1.29	%			1.14	%			1.83	%			0.15	%			-0.55	%
Average earning assets		$	59,206			$	59,141			$	41,841			$	65			$	17,365
Financing and leasing assets		$	50,286			$	50,381			$	35,369			$	(96	)		$	14,917
* Certain balances may not sum due to rounding.
(1) Ratios based on the fully phased-in basis.

Income from continuing operations of $152 million includes net after-tax benefits of $4 million from discrete items related to our strategic initiatives. Discrete items include benefits from the sale of the U.K. Equipment Finance platform and a discrete tax item related to an international portfolio previously sold, which were partially offset by restructuring charges resulting from operating expense reduction initiatives, an impairment on the Non-Strategic Portfolio and currency translation adjustment (“CTA”) charges. In addition to these items, income this quarter included higher credit loss provisions for the oil and gas, and maritime portfolios which were partially offset by a mark-to-market benefit on the total return swap (“TRS”).

Tangible book value per share¹ increased to $48.39 reflecting net income for the quarter. Estimated Common Equity Tier 1 and Total Capital ratios at March 31, 2016 increased to 13.1% and 13.7%, respectively, as calculated under the fully phased-in Regulatory Capital Rules. Average earning assets² for the March 31, 2016 quarter were relatively flat at $59.2 billion reflecting growth in commercial businesses offset by run-off in the

¹ Tangible book value and tangible book value per share are non-GAAP measures. See “Non-GAAP Measurements” at the end of this press release and page 24 for reconciliation of non-GAAP to GAAP financial information.

² Average earning asset components include interest earning cash, investments, securities and indemnification assets. See “Non-GAAP Measurements” at the end of this press release and page 24 for reconciliation of Earning Assets non-GAAP to GAAP financial information.

 

liquidating portfolios. The ROTCE³ of 7.08% was flat from the prior quarter while the increase from the year-ago quarter reflects the lower capital levels primarily due to the acquisition of OneWest Bank.

Income Statement Highlights:

Net Finance Revenue*														Change from:
($ in millions)		1Q16				4Q15				1Q15				Prior Quarter				Prior Year
Interest income		$	495			$	510			$	281			$	(15	)		$	214
Rental income on operating leases			575				551				531				25				45
Finance revenue			1,071				1,061				812				9				259
Interest expense			(286	)			(287	)			(271	)			0				(15	)
Depreciation on operating lease equipment			(175	)			(167	)			(157	)			(9	)			(19	)
Maintenance and other operating lease expenses			(56	)			(80	)			(46	)			23				(10	)
Net finance revenue		$	553			$	528			$	337			$	25			$	216
Average earning assets		$	59,206			$	59,141			$	41,841			$	65			$	17,365
Net finance margin			3.74	%			3.57	%			3.23	%			0.16	%			0.51	%
* Certain balances may not sum due to rounding.

Net finance revenue⁴ was $553 million in the current quarter, compared to $528 million in the prior quarter and $337 million in the year-ago quarter. Average earning assets were essentially flat compared to the prior quarter reflecting growth in Rail, Commercial Finance, Business Capital and other consumer mortgage lending portfolios offset by run-off in the Legacy Consumer Mortgage portfolio and the sale of the U.K. Equipment Finance business. The increase in average earning assets from the year-ago quarter reflects the acquisition of OneWest Bank.

Net finance revenue as a percentage of average earning assets (“net finance margin”) increased from both the prior and year-ago quarters. The increase from the prior quarter was driven primarily by lower maintenance and other operating lease costs and elevated collections on remarketed aircraft in Transportation Finance offset by change in mix of assets resulting from the run-off or sale of higher yielding assets. The increase from the year-ago quarter reflects the benefits from the OneWest Bank acquisition.

Other Income*														Change from:
($ in millions)		1Q16				4Q15				1Q15				Prior Quarter				Prior Year
Factoring commissions		$	26			$	29			$	30			$	(3	)		$	(3	)
Fee revenues			33				35				23				(2	)			10
Gains on sales of leasing equipment			11				17				32				(6	)			(21	)
(Losses) gains on loan and portfolio sales			0				(41	)			7				42				(6	)
(Losses) gains on investments			(4	)			(6	)			1				2				(5	)
Gains (losses) on OREO sales			2				(2	)			-				4				2
Net gain (losses) on derivatives and foreign currency exchange			9				2				(10	)			8				19
Impairment on assets held for sale			(22	)			(15	)			(10	)			(7	)			(12	)
Other revenues			46				12				15				34				31
Total other income		$	101			$	30			$	86			$	71			$	15
* Certain balances may not sum due to rounding.

³ Adjusted Return on Tangible Common Equity, which adjusts tangible common equity for the reversal of the valuation allowance and the amortization of intangibles in the numerator and the disallowed deferred tax asset related to regulatory capital in the denominator, is a non-GAAP measure. See “Non-GAAP Measurements” at the end of this press release and page 24 for reconciliation of non-GAAP to GAAP financial information.

⁴ Net finance revenue, net finance margin and net operating lease revenue are non-GAAP measures. See “Non-GAAP Measurements” at the end of this press release and page 24 for reconciliation of non-GAAP to GAAP financial information.

 

Other income of $101 million includes approximately $10 million of net benefits from international business exits including a $24 million gain on the sale of the U.K. platform recorded in Other Revenue partially offset by impairment of $11 million in the Non-Strategic Portfolios in held for sale and the recognition of CTA losses. In addition, the current quarter includes an $18 million benefit from the mark-to-market on the total return swap (TRS). The prior quarter included a loss on the sale of the Brazil platform primarily related to the recognition of $51 million of CTA losses. The year-ago quarter benefited from the sale of aircraft and a benefit on the termination of a defaulted contract, which were partially offset by a CTA charge in the U.K. and additional impairment charges on the Non-Strategic Portfolios.

Operating Expenses*														Change from:
($ in millions)		1Q16				4Q15				1Q15				Prior Quarter				Prior Year
Compensation and benefits		$	(172	)		$	(152	)		$	(147	)		$	(21	)		$	(26	)
Technology			(30	)			(33	)			(22	)			2				(8	)
Professional fees			(39	)			(43	)			(20	)			5				(19	)
Net occupancy expense			(18	)			(18	)			(9	)			(1	)			(9	)
Advertising and marketing			(5	)			(8	)			(9	)			3				4
Other expenses			(57	)			(44	)			(35	)			(13	)			(21	)
Operating expenses before provision for severance and facilities exiting and intangible asset amortization			(322	)			(298	)			(242	)			(24	)			(80	)
Provision for severance and facilities exiting activities			(20	)			(53	)			1				33				(21	)
Intangible asset amortization			(6	)			(7	)			(1	)			1				(6	)
Total operating expenses		$	(349	)		$	(358	)		$	(242	)		$	9			$	(107	)
Net efficiency ratio			49.2	%			53.3	%			57.1	%			4.1	%			7.9	%
* Certain balances may not sum due to rounding.

Operating expenses excluding restructuring costs and intangible asset amortization were $322 million in the current quarter. Expenses reflect the sale of Non-Strategic Portfolios and the streamlining of the management structure, however these benefits were partially offset by annual benefit restarts and costs associated with the strategic initiatives, primarily costs associated with the OneWest Bank integration and the Commercial Air separation. The prior quarter reflected lower compensation and benefits from adjusting accruals related to incentive compensation and changes to benefit plans. The increase from the prior year reflects the addition of OneWest Bank. The net efficiency ratio⁵ improved to 49% reflecting higher other income and to a lesser extent, an increase in net finance revenue partially offset by higher operating expenses. Headcount at March 31, 2016 was 4,740 down from 4,900 in the prior quarter reflecting strategic initiatives and up from 3,360 a year-ago due to the OneWest addition. Restructuring costs this quarter relate to strategic initiatives to reduce operating expenses, while the amortization of intangibles is primarily due to the OneWest Bank acquisition.

Income Taxes

The provision for income taxes of $53 million for the quarter included $13 million of discrete tax benefits from the resolution of a tax position on an international portfolio that had been previously sold. The prior quarter was an income tax benefit of $10 million reflecting $15 million in discrete benefits from the resolution of a tax position on an international portfolio previously sold and included a positive impact from the year-end true up to reflect the full year actual geographic mix of earnings. The current effective tax rate was 26% and excluding

⁵ Net efficiency ratio is a non-GAAP measure. See “Non-GAAP Measurements” at the end of this press release and page 24 for reconciliation of non-GAAP to GAAP financial information.

 

discrete items was 31% for the quarter. Cash taxes were $2 million compared to net receipt of $17 million in the prior quarter and net payment of $14 million in the year-ago quarter.

Balance Sheet Highlights:

Earning Assets*														Change from:
($ in millions)		1Q16				4Q15				1Q15				Prior Quarter				Prior Year
Loans (including assets held for sale)		$	33,475			$	33,671			$	20,203			$	(197	)		$	13,272
Operating lease equipment, net  (including assets held for sale)			16,811				16,710				15,167				101				1,645
Financing and Leasing Assets			50,286				50,381				35,369				(96	)			14,917
Interest bearing cash			7,135				6,820				5,393				315				1,742
Investment securities			2,897				2,954				1,347				(57	)			1,549
Indemnification assets			389				415				-				(25	)			389
Securities purchased under agreements to resell			-				-				450				-				(450	)
Credit balances of factoring clients			(1,361	)			(1,344	)			(1,505	)			(17	)			144
Total Earning Assets		$	59,346			$	59,226			$	41,055			$	120			$	18,291
* Certain balances may not sum due to rounding.

Earning assets at March 31, 2016 rose slightly from the prior quarter, reflecting growth in interest bearing cash, and financing and leasing assets previously noted. The increase from the year-ago quarter principally reflects the assets acquired from OneWest Bank.

Total cash and investment securities, including non-interest bearing cash, were $11.0 billion at March 31, 2016, and consisted of $8.1 billion of cash and $2.9 billion of debt and FHLB stock and equity securities. Of this total, $1.3 billion was at the bank holding company, $8.3 billion was at CIT Bank (excluding $0.1 billion of restricted cash), and the remaining $1.1 billion represented cash at operating subsidiaries and other restricted balances.

Deposits and Borrowings*														Change from:
($ in millions)		1Q16				4Q15				1Q15				Prior Quarter				Prior Year
Total Deposits		$	32,893			$	32,782			$	16,758			$	111			$	16,135
Unsecured borrowings		$	10,587			$	10,636			$	10,681			$	(49	)		$	(93	)
Secured borrowings			7,425				7,806				5,856				(380	)			1,569
Total Borrowings		$	18,013			$	18,442			$	16,537			$	(429	)		$	1,476
* Certain balances may not sum due to rounding.

Deposits rose modestly from the prior quarter. The decline in unsecured borrowings reflects a modest amount of repurchases, and the decline in secured borrowings relates to the amortization and maturities of structured financings. The increase in borrowings from March 31, 2015 primarily reflected deposits and FHLB borrowings related to the acquisition of OneWest Bank in the third quarter of 2015. At March 31, 2016, deposits represented approximately 65% of CIT’s funding, with unsecured and secured borrowings comprising 21% and 14% of the funding mix, respectively, reflecting the ongoing shift from unsecured borrowings to deposit funding. The weighted average coupon rate on outstanding deposits and borrowings was 2.22% at March 31, 2016, unchanged from December 31, 2015 and down from 3.04% at March 31, 2015.

 

Capital*														Change from:
($ in millions, except per share data)		1Q16				4Q15				1Q15				Prior Quarter				Prior Year
Common Stockholders' Equity		$	11,126			$	10,978			$	8,759			$	148			$	2,367
Tangible Common Equity		$	9,760			$	9,604			$	8,172			$	157			$	1,589
Total risk-based capital(1)		$	9,524			$	9,289			$	8,348			$	235			$	1,176
Risk-weighted assets(1)		$	69,320			$	70,239			$	56,340			$	(919	)		$	12,980
Book value per share (BVPS)		$	55.16			$	54.61			$	50.26			$	0.55			$	4.90
Tangible book value per share (TBVPS)		$	48.39			$	47.77			$	46.89			$	0.62			$	1.50
CET 1 Ratio(1)			13.1	%			12.7	%			14.1	%			0.4	%			-1.0	%
Total Capital Ratio(1)			13.7	%			13.2	%			14.8	%			0.5	%			-1.1	%
Tier 1 Leverage Ratio(1)			13.8	%			13.4	%			17.1	%			0.4	%			-3.3	%
* Certain balances may not sum due to rounding.
(1) Balances and ratios based on the fully phased-in basis.

The sequential increase in common stockholders’ equity and tangible common equity primarily reflects the current period earnings, while the acquisition of OneWest Bank was a principal contributor to the increase from March 31, 2015, primarily due to the issuance of common shares and the reversal of the valuation allowance on our Federal deferred tax asset in the third quarter. The lower increase in tangible common equity from March 31, 2015 also reflects the increase in goodwill and intangibles resulting from the acquisition of OneWest Bank. While regulatory capital also increased, the amount was less than the common equity increase since the majority of the deferred tax asset balance is disallowed for regulatory capital purposes. As a result, capital ratios declined from March 31, 2015 as the benefit from the increase in regulatory capital was more than offset by the increase in the risk-weighted assets acquired.

All regulatory capital ratios increased from the prior quarter resulting from current period earnings and a reduction in risk weighted assets reflecting the mix of assets while the decline from the prior year reflects the acquisition of OneWest Bank.  The ratios presented are estimated Common Equity Tier 1 and Total Capital ratios under the fully phased-in Regulatory Capital Rules.

Book value per share and tangible book value per share increased sequentially, to $55.16 and $48.39, respectively, reflecting earnings in the first quarter. Both amounts also increased from March 31, 2015, as the increase in equity outpaced the increase in shares outstanding.

In April 2016, the Board approved a $0.15 cash dividend payable on May 27, 2016 to common shareholders of record as of May 13, 2016.

 

 

Asset Quality

Asset Quality*														Change from:
($ in millions)		1Q16				4Q15				1Q15				Prior Quarter				Prior Year
Net charge-offs (NCO)		$	51			$	32			$	21			$	19			$	30
NCO % of AFR			0.65	%			0.40	%			0.43	%			0.25	%			0.22	%
Non-accrual		$	295			$	268			$	184			$	27			$	112
OREO		$	100			$	122			$	-			$	(22	)		$	100
Provision for credit losses		$	99			$	58			$	35			$	42			$	65
Total Portfolio Allowance as a % of Finance Receivables (FR)			1.29	%			1.14	%			1.83	%			0.15	%			-0.55	%
Allowance for loan losses plus principal loss discount as % of FR (before principal loss discount) / Commercial			1.87	%			1.79	%			1.83	%			0.08	%			0.04	%
* Certain balances may not sum due to rounding.

Excluding the impact relating to assets transferred to held for sale in all periods, net charge-offs were $42 million (0.53% of average finance receivables), compared to $13 million (0.16%) in the prior quarter and $10 million (0.20%) in the year-ago quarter. The current quarter net charge offs includes $15 million in the energy (oil and gas) portfolio and $11 million related to two Aerospace loans. Recoveries of $5 million were down slightly from the prior and year-ago quarters.

Non-accrual loans of $295 million increased over the prior quarter and the year-ago quarter, primarily due to increases in the energy portfolio. The provision for credit losses increased over both the prior quarter and the year-ago quarter and includes $31 million related to the energy portfolio, $14 million related to the maritime portfolio and discrete charge-offs of $11 million in the Aerospace loan portfolio noted above.

The allowance for loan losses was $405 million (1.29% of finance receivables, 1.52% excluding loans subject to loss sharing agreements with the FDIC) at March 31, 2016, compared to $360 million (1.14% of finance receivables, 1.35% excluding loans subject to loss sharing agreements with the FDIC) at December 31, 2015 and $357 million (1.83% of finance receivables) at March 31, 2015. The increase from the prior and year-ago quarters is concentrated in the energy and maritime portfolios, although there were also modest increases across other industries. Including the impact of the principal loss discount on credit impaired loans, which is essentially a reserve for credit losses on the discounted loans, the commercial loan allowance to finance receivables was 1.87% compared to 1.79% at December 31, 2015. The consumer loans ratio was 7.86% at March 31, 2016 and 8.62% at December 31, 2015, respectively, as most of the consumer loans purchased were credit impaired and are partially covered by loss sharing agreements with the FDIC. The decrease over prior quarter is driven by the shift in asset mix as new originations offset the run-off of the purchased credit impaired portfolio.

CIT’s loans to the oil and gas industry totaled $0.9 billion or 3% of total loans at March 31, 2016 of which 42% are criticized. The portfolio has loss coverage of 12% of the principal balance reflecting the purchase accounting discount for loans acquired from OneWest Bank and the allowance for loan losses. If market conditions remain the same, the portfolio will likely experience additional downward credit migration.

 

 

Segment Highlights:

We changed our segment reporting effective January 1, 2016, following the previously announced reorganized management structure. CIT manages its business and reports its financial results in four operating segments: Commercial Banking, Transportation Finance, Consumer and Community Banking, and Non-Strategic Portfolios (“NSP”), and a fifth non-operating segment, Corporate and Other.

The following summarizes changes to our segment presentation from December 31, 2015:

·

Commercial Banking (formerly North America Banking or “NAB”) no longer includes the Consumer Banking division or the Canadian lending and equipment finance business. Commercial Banking is comprised of three divisions, Commercial Finance, Real Estate Finance, and Business Capital. Business Capital includes the former Equipment Finance and Commercial Services divisions.

·

Transportation Finance (formerly Transportation & International Finance or “TIF”) no longer includes the China and the U.K. businesses. Transportation Finance is comprised of three divisions, Aerospace, Rail, and Maritime Finance.

·

Consumer and Community Banking is a new segment that includes Legacy Consumer Mortgages (the former LCM segment) and other banking divisions that were included in the former NAB segment (Consumer Banking, Mortgage Lending, Wealth Management, and SBA Lending).

·

NSP includes businesses that we no longer consider strategic, including those in Canada and China and recently exited U.K., that had been included in the former NAB and TIF segments. Historic data will also include other businesses and portfolios that have been sold, such as Mexico and Brazil.

All prior period comparisons are conformed to the current period presentation.

Commercial Banking

Earnings Summary*														Change from:
($ in millions)		1Q16				4Q15				1Q15				Prior Quarter				Prior Year
Interest income		$	287			$	286			$	181			$	2			$	106
Rental income on operating leases			27				26				23				1				4
Interest expense			(74	)			(68	)			(65	)			(6	)			(9	)
Depreciation on operating lease equipment			(20	)			(19	)			(17	)			(1	)			(3	)
Net finance revenue			221				224				122				(4	)			98
Other income			56				69				64				(13	)			(8	)
Provision for credit losses			(74	)			(45	)			(24	)			(28	)			(49	)
Operating expenses			(158	)			(146	)			(131	)			(12	)			(27	)
Income before income taxes		$	44			$	102			$	30			$	(58	)		$	14
Select Average Balances
Average finance receivables		$	21,131			$	21,463			$	14,986			$	(332	)		$	6,145
Average earning assets		$	20,727			$	20,944			$	14,357			$	(217	)		$	6,371
Statistical Data
Pre-tax ROAEA			0.85	%			1.95	%			0.84	%			-1.09	%			0.01	%
Net finance margin			4.26	%			4.29	%			3.41	%			-0.03	%			0.85	%
New business volume		$	1,581			$	2,165			$	1,296			$	(583	)		$	285
Net efficiency ratio			56.8	%			49.0	%			70.3	%			-7.8	%			13.5	%
* Certain balances may not sum due to rounding.

Commercial Banking pre-tax earnings declined from the prior quarter due to higher credit costs and operating expenses and lower other income, while the increase from the year-ago quarter also reflects the addition from OneWest Bank.

Financing and leasing assets (“FLA”), which comprise the majority of earning assets, were $22.0 billion at March 31, 2016, up 2% from December 31, 2015, reflecting new business volume and slower prepayment activity, and up 43% from a year-ago, reflecting the acquisition of OneWest Bank. New lending and leasing volume was down from the prior quarter but increased from the year-ago quarter in all divisions while factored volume was down from both the prior and year-ago quarters.

Net finance revenue decreased slightly from the prior quarter due to the decline in average earning assets and higher funding costs. The increase from the year-ago quarter reflects higher earning assets and purchase accounting accretion on loans acquired from OneWest Bank. Net finance margin was 4.26%, down slightly from the prior quarter and up from the year-ago quarter, benefiting from purchase accounting accretion on acquired loans and higher yields on certain new originations. 

Other income declined from the prior and year-ago quarters primarily reflecting lower gains on asset sales, while the decrease in other income from the year-ago quarter was partially offset by higher fee income.

Operating expenses increased from the prior quarter, reflecting higher legal expense in Commercial Finance and discrete items related to Business Capital. The increase from the year-ago quarter reflects the acquisition of OneWest Bank.

Net charge-offs were $32 million (0.60% of average finance receivables), consistent with the prior quarter and up from $19 million (0.52%) in the year-ago quarter. Excluding assets transferred to held for sale in all periods, net charge-offs were $30 million in the current quarter, up from $13 million in the prior quarter and $8 million in the year-ago quarter. The increase in the current period relates to energy loans. Non-accrual loans were $215 million

 

(1.00% of finance receivables), compared to $191 million (0.91%) at December 31, 2015, and $105 million (0.69%) a year-ago. The increase in balance from the prior quarters was primarily related to loans in the energy sector. The provision for credit losses increased from the prior periods from new business volume, increases in reserves related to the energy portfolio and modest increases across other industries

 

Transportation Finance

Earnings Summary*														Change from:
($ in millions)		1Q16				4Q15				1Q15				Prior Quarter				Prior Year
Interest income		$	53			$	50			$	43			$	3			$	10
Rental income on operating leases			545				518				497				26				48
Interest expense			(148	)			(143	)			(151	)			(5	)			3
Depreciation on operating lease equipment			(155	)			(148	)			(136	)			(7	)			(19	)
Maintenance and other operating lease expenses			(56	)			(80	)			(46	)			23				(10	)
Net finance revenue			238				197				207				41				31
Other income			19				25				35				(6	)			(17	)
Provision for credit losses			(23	)			(9	)			(6	)			(14	)			(16	)
Operating expenses			(61	)			(50	)			(67	)			(11	)			7
Income before income taxes		$	173			$	163			$	169			$	10			$	5
Select Average Balances
Average finance receivables		$	3,333			$	3,447			$	2,929			$	(113	)		$	405
Average operating leases		$	16,364			$	15,698			$	14,618			$	666			$	1,746
Average earning assets		$	20,620			$	19,784			$	18,881			$	835			$	1,739
Statistical Data
Pre-tax ROAEA			3.36	%			3.30	%			3.57	%			0.06	%			-0.21	%
Net finance margin			4.61	%			3.98	%			4.38	%			0.63	%			0.23	%
New business volume		$	246			$	1,620			$	420			$	(1,374	)		$	(174	)
Net efficiency ratio			23.7	%			22.1	%			27.7	%			-1.6	%			4.0	%
* Certain balances may not sum due to rounding.

Transportation Finance pre-tax earnings were up from the prior and year-ago quarters, reflecting increased net finance revenue on higher average earning assets, with the comparison to the prior quarter also reflecting lower equipment maintenance and operating lease expenses.  The current quarter also reflects a higher credit provision due to two discrete Aerospace loan charge-offs and increased reserves in Maritime.

Financing and leasing assets totaled $19.9 billion, essentially unchanged from December 31, 2015 and up from $17.8 billion at March 31, 2015. Compared to the prior quarter, Rail assets increased, Aerospace assets decreased and Maritime assets were essentially unchanged. The increase from the prior year reflects growth in all three divisions. Assets held for sale increased to $0.8 billion, reflecting the addition of the international business air portfolio. New business volume for the quarter totaled $0.2 billion, down significantly from the prior quarter due to only one aircraft delivery compared to 14 aircraft last quarter and lower loan volume.

Net finance revenue was up from the prior and year-ago quarters, reflecting higher rental income driven by higher average operating lease assets and elevated collections on remarketed aircraft and loan prepayments. The sequential comparison also included lower costs associated with the air and rail operating lease portfolios. Net finance margin was up reflecting the noted net finance revenue trends and a slight reduction in funding costs from the prior year. Gross yields in Aerospace were up slightly from the prior quarter to 11.2%, while gross yields in Rail of 13.7% were flat with the prior quarter as the impact of lower utilization was offset by higher interim rents.

 

Other income declined from the prior and year-ago quarters reflecting lower gains from equipment sales.

Operating expenses increased from the prior quarter, reflecting seasonally higher employee costs and approximately $4 million of costs related to the commercial air separation initiative. Operating expenses were down from the year-ago quarter.     

Net charge-offs, excluding assets transferred to held for sale, of $13 million (1.53% of average finance receivables) related to the Aerospace loan portfolio compared to net charge-offs of less than $1 million (0.09%) in the prior quarter. Non-accrual loans of $22 million (0.78% of finance receivables) increased from $15 million (0.43%) at December 30, 2015 and $0.1 million a year-ago, and principally consisted of business aircraft loans in each of the periods. The provision for credit losses increased from the prior quarters largely reflecting general reserve increases in Maritime and the Aerospace loan charge-offs noted above. 

Utilization trends were mixed compared to the prior quarter. Aircraft utilization remained unchanged from year-end with all aircraft on lease or under a commitment at quarter-end, while Rail utilization declined from 96% to 94%, reflecting pressures mostly from the crude, coal and steel industries. All but two of our aircraft scheduled for delivery in the next 12 months and 40% of the total railcar order-book have lease commitments.

Consumer and Community Banking

Earnings Summary*														Change from:
($ in millions)		1Q16				4Q15				1Q15				Prior Quarter				Prior Year
Interest income		$	103			$	110			$	-			$	(6	)		$	103
Interest expense			(9	)			(13	)			-				4				(9	)
Net finance revenue			94				96				-				(2	)			94
Other income			8				5				-				3				8
Provision for credit losses			(3	)			(4	)			-				1				(3	)
Operating expenses			(82	)			(85	)			-				3				(82	)
Income before income taxes		$	17			$	13			$	-			$	4			$	17
Select Average Balances
Average finance receivables		$	7,160			$	7,205			$	-			$	(44	)		$	7,160
Average earning assets		$	7,758			$	7,846			$	-			$	(88	)		$	7,758
Statistical Data
Pre-tax ROAEA			0.88	%			0.68	%			-				0.20	%			0.88	%
Net finance margin			4.86	%			4.91	%			-				-0.05	%			4.86	%
New business volume		$	215			$	220			$	-			$	(6	)		$	215
Net efficiency ratio			75.8	%			78.8	%			-				-3.0	%			75.8	%
* Certain balances may not sum due to rounding.

This segment includes our consumer banking and lending businesses, which offers traditional depository and lending products to consumers and small businesses. In addition, the segment includes legacy portfolios of certain single family residential mortgage loans and reverse mortgage loans (collectively LCM), both of which will run-off over time. In aggregate, these portfolios total $5.4 billion, approximately $4.8 billion of which are mostly covered by loss sharing agreements with the FDIC, the benefit of which is recorded as an indemnification asset whose current carrying value is approximately $390 million.

Consumer and Community Banking pre-tax earnings increased from the prior quarter primarily due to an increase in other income resulting from gains on OREO and lower legal expenses.

Financing and leasing assets totaled $7.2 billion at March 31, 2016, flat with December 31, 2015, as the run-off of the LCM portfolios offset new volume.

Non-accrual loans were $7 million (0.10% of finance receivables) at March 31, 2016, slightly up from $5 million (0.07%) at December 31, 2015.The provision reflects reserves established on new business, in addition to slight credit deterioration in the LCM portfolio.

 

Non-Strategic Portfolios (NSP)

Earnings Summary*														Change from:
($ in millions)		1Q16				4Q15				1Q15				Prior Quarter				Prior Year
Interest income		$	25			$	40			$	53			$	(15	)		$	(28	)
Rental income on operating leases			4				7				11				(3	)			(7	)
Interest expense			(15	)			(22	)			(38	)			8				24
Depreciation on operating lease equipment			-				-				(4	)			-				4
Net finance revenue			14				25				22				(10	)			(8	)
Other income			15				(54	)			(6	)			69				21
Provision for credit losses			-				-				(4	)			-				4
Operating expenses			(12	)			(26	)			(37	)			14				25
Income (loss) before income taxes		$	17			$	(56	)		$	(25	)		$	73			$	42
Select Average Balances
Average earning assets		$	1,517			$	1,954			$	2,718			$	(437	)		$	(1,202	)
Statistical Data
Pre-tax ROAEA			4.38	%			-11.49	%			-3.68	%			15.86	%			8.06	%
Net finance margin			3.77	%			5.02	%			3.24	%			-1.24	%			0.53	%
New business volume		$	44			$	167			$	201			$	(123	)		$	(157	)
* Certain balances may not sum due to rounding.

NSP pre-tax earnings reflects the gain of $24 million from the sale of the U.K. business partially offset by an $11 million impairment charge on assets held for sale, compared to pre-tax losses in the prior quarter and year-ago quarter. The pre-tax loss in the prior quarter reflected the completion of the sale of our Brazil business and a resulting loss, mainly due to the recognition of a $51 million CTA loss. The year-ago pre-tax loss was driven by the higher level of operating expenses reflective of the remaining businesses at that time. Financing and leasing assets at March 31, 2016 totaled $1.2 billion, down from $1.6 billion at December 31, 2015 and $2.2 billion March 31, 2015. Our remaining businesses include Canada and China, and these portfolios are classified as held for sale.

Corporate & Other

Earnings Summary*														Change from:
($ in millions)		1Q16				4Q15				1Q15				Prior Quarter				Prior Year
Interest income		$	27			$	26			$	4			$	1			$	23
Interest expense			(41	)			(40	)			(18	)			(1	)			(23	)
Net finance revenue			(14	)			(14	)			(14	)			0				(0	)
Other income			4				(14	)			(6	)			18				10
Operating expenses			(37	)			(53	)			(6	)			16				(31	)
Loss before income taxes		$	(47	)		$	(81	)		$	(26	)		$	35			$	(20	)
Select Average Balances
Average earning assets		$	8,585			$	8,614			$	5,885			$	(28	)		$	2,700
Statistical Data
Pre-tax ROAEA			-2.17	%			-3.77	%			-1.78	%			1.60	%			-0.39	%
Net finance margin			-0.65	%			-0.65	%			-0.93	%			0.00	%			0.28	%
* Certain balances may not sum due to rounding.

Certain items are not allocated to operating segments and are included in Corporate and Other, including interest expense, primarily related to corporate liquidity costs, mark-to-market on certain derivatives, restructuring charges, certain legal costs and other operating expenses. Interest income increased from both prior and year-ago quarters primarily related to income generated from the investment portfolio. Other income included a $18 million mark-to-market benefit on the TRS derivative in the current quarter, compared to a small benefit of $1 million in the prior quarter and a negative mark-to-market adjustment of $1 million in the year-ago quarter. Operating expenses for the quarter reflect restructuring charges of $20 million, compared to $53 million in the prior quarter, reflecting our previously announced organizational changes, and a net reversal of $1 million in the year-ago quarter.

 

Discontinued Operations

Income from discontinued operations, net of taxes, was a loss of $5 million in the current quarter compared to a loss of $7 million in the prior quarter.  Discontinued operations predominantly relate to third-party reverse mortgage servicing activity, known as Financial Freedom, which the Company acquired in the OneWest Bank acquisition.

 

Conference Call and Webcast

Chairman and Chief Executive Officer Ellen Alemany and Chief Financial Officer Carol Hayles will discuss these results on a conference call and audio webcast today, April 28, at 8:00 a.m. (EST). 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 “2728263” 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 May 28, 2016, by dialing 877-344-7529 for U.S. callers, 855-669-9658 for Canadian callers or 412-317-0088 for international callers with the access code “10084072”, or at cit.com/investor.

 

About CIT

Founded in 1908, CIT (NYSE: CIT) is a financial holding company with more than $65 billion in assets. Its principal bank subsidiary, CIT Bank, N.A., (Member FDIC, Equal Housing Lender) has more than $30 billion of deposits and more than $40 billion of assets. It provides financing, leasing and advisory services principally to middle market companies across a wide variety of industries primarily in North America, and equipment financing and leasing solutions to the transportation sector. It also offers products and services to consumers through its Internet bank franchise and a network of retail branches in Southern California, operating as OneWest Bank, a division of CIT Bank, N.A. cit.com

 

Forward-Looking Statements

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 implementing its strategy and business plan, the risk that CIT is unable to react to and address key business and regulatory issues, the risk that CIT is unable to achieve the projected revenue growth from its new business initiatives or the projected expense reductions from efficiency improvements, and the risk that CIT becomes subject to liquidity constraints and higher funding costs.  We describe these and other risks that could affect our results in Item 1A, “Risk Factors,” of our latest Annual Report on Form 10-K for the year ended December 31, 2015, which was 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.

 

Non-GAAP Measurements

Net finance revenue, net operating lease revenue and average earning assets are non-GAAP measurements used by management to gauge portfolio performance. Operating expenses excluding restructuring costs and intangible amortization is a non-GAAP measurement used by management to compare period over period expenses. Net efficiency ratio measures operating expenses (net of restructuring costs and intangible amortization) to our level of total net revenues. Total assets from continuing operations is a non-GAAP measurement used by management to analyze the total asset change on a more consistent basis. Tangible book value and tangible book value per share are non-GAAP metrics used to analyze banks.

 

###

 

CIT MEDIA RELATIONS:	CIT INVESTOR RELATIONS:
Matt Klein	Barbara Callahan
Vice President, Media Relations	Senior Vice President
(973) 597-2020 [email protected]	(973) 740-5058 [email protected]

###

 

 

CIT GROUP INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Income

(dollars in millions, except per share data)

               

 

		Quarters Ended
		March 31,				December 31,				March 31,
		2016				2015				2015
Interest income
Interest and fees on loans		$	464.5			$	480.1			$	272.4
Other Interest and dividends			30.9				30.3				8.6
Total interest income			495.4				510.4				281.0
Interest expense
Interest on borrowings			(186.9	)			(187.5	)			(202.3	)
Interest on deposits			(99.5	)			(99.2	)			(69.0	)
Total interest expense			(286.4	)			(286.7	)			(271.3	)
Net interest revenue			209.0				223.7				9.7
Provision for credit losses			(99.3	)			(57.6	)			(34.6	)
Net interest revenue, after credit provision			109.7				166.1				(24.9	)
Non-interest income
Rental income on operating leases			575.4				550.9				530.6
Other income			100.9				30.4				86.4
Total non-interest income			676.3				581.3				617.0
Non-interest expenses
Depreciation on operating lease equipment			(175.3	)			(166.8	)			(156.8	)
Maintenance and other operating lease expenses			(56.2	)			(79.6	)			(46.1	)
Operating expenses			(348.5	)			(357.8	)			(241.6	)
Loss on debt extinguishment			(1.6	)			(2.2	)			-
Total other expenses			(581.6	)			(606.4	)			(444.5	)
Income from continuing operations before (provision) benefit for income taxes			204.4				141.0				147.6
(Provision) benefit for income taxes			(52.7	)			10.2				(44.0	)
Income from continuing operations, before attribution of noncontrolling interests			151.7				151.2				103.6
Net loss attributable to noncontrolling interests, after tax			-				-				0.1
Income from continuing operations			151.7				151.2				103.7
Discontinued operation
Loss from discontinued operation			(7.4	)			(11.2	)			-
Benefit for income taxes			2.6				4.5				-
Loss from discontinued operation, net of taxes			(4.8	)			(6.7	)			-
Net income		$	146.9			$	144.5			$	103.7
Basic income per common share
Income from continuing operations		$	0.75			$	0.75			$	0.59
Loss from discontinued operation, net of taxes			(0.02	)			(0.03	)			-
Basic income per common share		$	0.73			$	0.72			$	0.59
Average number of common shares - basic (thousands)			201,394				200,987				176,260
Diluted income per common share
Income from continuing operations		$	0.75			$	0.75			$	0.59
Loss from discontinued operation, net of taxes			(0.02	)			(0.03	)			-
Diluted income per common share		$	0.73			$	0.72			$	0.59
Average number of common shares - diluted (thousands)			202,136				201,376				177,072

 

 

CIT GROUP INC. AND SUBSIDIARIES

Unaudited Consolidated Balance Sheets

(dollars in millions, except per share data)

             

 

		March 31,				December 31,				March 31,
		2016*				2015				2015
Assets
Total cash and deposits		$	8,141.8			$	8,301.5			$	6,306.9
Securities purchased under agreements to resell			-				-				450.0
Investment securities			2,896.8				2,953.8				1,347.4
Assets held for sale			2,211.2				2,092.4				1,051.9
Loans			31,408.6				31,671.7				19,429.3
Allowance for loan losses			(404.6	)			(360.2	)			(356.5	)
Loans, net of allowance for loan losses			31,004.0				31,311.5				19,072.8
Operating lease equipment, net			16,665.7				16,617.0				14,887.8
Indemnification assets			389.4				414.8				-
Goodwill			1,195.1				1,198.3				563.6
Intangible assets			170.3				176.3				23.2
Unsecured counterparty receivable			556.3				537.8				537.1
Other assets			3,377.5				3,297.6				2,054.1
Assets of discontinued operation			489.5				500.5				-
Total assets		$	67,097.6			$	67,401.5			$	46,294.8
Liabilities
Deposits		$	32,892.7			$	32,782.2			$	16,758.1
Credit balances of factoring clients			1,361.0				1,344.0				1,505.3
Other liabilities			3,020.2				3,158.7				2,735.2
Borrowings
Unsecured borrowings			10,587.4				10,636.3				10,680.8
Structured financings			4,308.9				4,687.9				5,769.6
FHLB advances			3,116.3				3,117.6				86.7
Total borrowings			18,012.6				18,441.8				16,537.1
Liabilities of discontinued operation			684.8				696.2				-
Total liabilities			55,971.3				56,422.9				37,535.7
Equity
Stockholders' equity
Common stock			2.1				2.0				2.0
Paid-in capital			8,739.4				8,718.1				8,598.0
Retained earnings			2,673.7				2,557.4				1,692.3
Accumulated other comprehensive loss			(117.4	)			(142.1	)			(163.1	)
Treasury stock, at cost			(172.0	)			(157.3	)			(1,370.6	)
Total common stockholders' equity			11,125.8				10,978.1				8,758.6
Noncontrolling interests			0.5				0.5				0.5
Total equity			11,126.3				10,978.6				8,759.1
Total liabilities and equity		$	67,097.6			$	67,401.5			$	46,294.8
Book Value Per Common Share
Book value per common share		$	55.16			$	54.61			$	50.26
Tangible book value per common share		$	48.39			$	47.77			$	46.89
Outstanding common shares (in thousands)			201,702				201,022				174,280

 

* Preliminary          

 

 

CIT GROUP INC. AND SUBSIDIARIES

Average Balances and Rates

(dollars in millions)

                         

 

		Quarters Ended
		March 31, 2016								December 31, 2015								March 31, 2015
		Average Balance				Rate				Average Balance				Rate				Average Balance				Rate
Assets
Interest bearing deposits		$	7,114.0				0.47	%		$	6,671.6				0.32	%		$	5,951.6				0.27	%
Securities purchased under agreements to resell			-				-				25.0				0.49	%			575.0				0.49	%
Investments			2,923.5				3.08	%			3,334.9				3.00	%			1,497.2				1.04	%
Loans (including held for sale)
U.S.			32,091.5				5.74	%			32,467.3				5.71	%			17,908.2				5.36	%
Non-U.S.			1,291.0				8.18	%			1,707.8				9.46	%			2,235.3				9.38	%
Total Loans			33,382.5				5.84	%			34,175.1				5.90	%			20,143.5				5.84	%
Total interest earning assets / interest income			43,420.0				4.74	%			44,206.6				4.80	%			28,167.3				4.22	%
Operating lease equipment, net (including held for sale)
U.S.			8,831.3				8.41	%			8,534.7				7.58	%			7,769.5				9.15	%
Non-U.S.			7,890.0				8.02	%			7,538.7				7.58	%			7,420.0				8.08	%
Total operating lease equipment, net			16,721.3				8.23	%			16,073.4				7.58	%			15,189.5				8.63	%
Indemnification assets			401.7				-3.09	%			445.8				-0.72	%			-				-
Total earning assets			60,543.0				5.67	%			60,725.8				5.51	%			43,356.8				5.82	%
Non-interest earning assets
Cash and due from banks			1,331.4								1,636.4								903.6
Allowance for loan losses			(371.5	)							(338.3	)							(347.7	)
All other non-interest bearing assets			5,298.4								5,334.2								3,190.6
Assets of discontinued operation			495.1								506.9								-
Total Average Assets		$	67,296.4							$	67,865.0							$	47,103.3
Liabilities
Borrowings
Deposits		$	31,829.1				1.25	%		$	31,538.3				1.26	%		$	16,275.6				1.70	%
Borrowings			18,210.4				4.11	%			18,805.9				3.99	%			17,477.4				4.63	%
Total interest-bearing liabilities			50,039.5				2.29	%			50,344.2				2.28	%			33,753.0				3.22	%
Non-interest bearing deposits			1,080.2								1,125.9								106.6
Credit balances of factoring clients			1,337.5								1,584.5								1,501.4
Other non-interest bearing liabilities			3,063.7								3,231.1								2,870.6
Liabilities of discontinued operation			690.2								674.6								-
Noncontrolling interests			0.5								0.5								(3.9	)
Stockholders' equity			11,084.8								10,904.2								8,875.6
Total Average Liabilities and Stockholders' Equity		$	67,296.4							$	67,865.0							$	47,103.3

 

 

CIT GROUP INC. AND SUBSIDIARIES

Select Accounts

(dollars in millions)

           

 

		Quarters Ended
		March 31,				December 31,				March 31,
		2016				2015				2015
OTHER INCOME
Fee revenues		$	32.7			$	34.7			$	22.6
Factoring commissions			26.4				29.1				29.5
Gains on sales of leasing equipment			11.2				16.9				32.0
Net gain (losses) on derivatives and foreign currency exchange			9.3				1.8				(9.7	)
Gain (loss) on OREO sales			1.7				(2.2	)			-
(Loss) gains on loan and portfolio sales			0.3				(41.3	)			6.6
(Losses) gains on investments			(4.1	)			(5.6	)			0.7
Impairment on assets held for sale			(22.1	)			(14.9	)			(10.1	)
Other revenues			45.5				11.9				14.8
Total other income		$	100.9			$	30.4			$	86.4
OPERATING EXPENSES
Compensation and benefits		$	(172.2	)		$	(151.5	)		$	(146.5	)
Professional fees			(38.8	)			(43.4	)			(19.5	)
Technology			(30.4	)			(32.7	)			(22.3	)
Net occupancy expense			(18.4	)			(17.9	)			(9.4	)
Advertising and marketing			(5.4	)			(8.1	)			(9.1	)
Other expenses			(56.6	)			(44.0	)			(35.2	)
Operating expenses, before provision for severance and facilities exiting and intangible asset amortization			(321.8	)			(297.6	)			(242.0	)
Provision for severance and facilities exiting activities			(20.3	)			(53.0	)			1.0
Intangible asset amortization			(6.4	)			(7.2	)			(0.6	)
Total operating expenses		$	(348.5	)		$	(357.8	)		$	(241.6	)

 

		March 31,				December 31,				March 31,
		2016*				2015				2015
TOTAL CASH AND INVESTMENT SECURITIES
Total cash and deposits		$	8,141.8			$	8,301.5			$	6,306.9
Securities purchased under agreements to resell			-				-				450.0
Investment securities			2,896.8				2,953.8				1,347.4
Total cash and investment securities		$	11,038.6			$	11,255.3			$	8,104.3
OTHER ASSETS
Current and deferred federal and state tax assets		$	1,197.4			$	1,252.5			$	460.7
Deposits on commercial aerospace equipment			774.3				696.0				750.6
Tax credit investments and investments in unconsolidated subsidiaries			237.9				223.9				75.2
Property, furniture and fixtures			192.1				197.2				123.4
Other counterparty receivables			179.6				59.0				25.2
Tax receivables, other than income taxes			105.7				98.2				101.9
Other real estate owned and repossessed assets			105.4				127.3				0.6
Fair value of derivative financial instruments			97.4				140.7				199.4
Other			487.7				502.8				317.1
Total other assets		$	3,377.5			$	3,297.6			$	2,054.1
OTHER LIABILITIES
Equipment maintenance reserves		$	1,042.2			$	1,012.4			$	965.2
Accrued expenses and accounts payable			563.6				628.1				385.6
Current and deferred taxes payable			354.5				363.1				340.9
Fair value of derivative financial instruments			196.5				103.0				67.5
Security and other deposits			179.9				263.0				379.7
Accrued interest payable			161.0				209.6				171.7
Valuation adjustment relating to aerospace commitments			73.1				73.1				117.1
Other liabilities			449.4				506.4				307.5
Total other liabilities		$	3,020.2			$	3,158.7			$	2,735.2

 

* Preliminary          

 

 

CIT GROUP INC. AND SUBSIDIARIES

Financing and Leasing Assets

(dollars in millions)

 

 

		March 31,				December 31,				March 31,
		2016				2015				2015
Commercial Banking
Commercial Finance
Loans		$	9,329.4			$	9,118.6			$	6,552.0
Assets held for sale			203.4				313.6				87.6
Financing and leasing assets			9,532.8				9,432.2				6,639.6
Real Estate Finance
Loans			5,348.5				5,300.6				1,813.9
Assets held for sale			14.4				57.0				-
Financing and leasing assets			5,362.9				5,357.6				1,813.9
Business Capital
Loans			6,759.3				6,510.0				6,693.0
Operating lease equipment, net			292.6				259.0				225.4
Assets held for sale			11.9				44.3				-
Financing and leasing assets			7,063.8				6,813.3				6,918.4
Total Segment
Loans			21,437.2				20,929.2				15,058.9
Operating lease equipment, net			292.6				259.0				225.4
Assets held for sale			229.7				414.9				87.6
Financing and leasing assets			21,959.5				21,603.1				15,371.9
Transportation Finance
Aerospace
Loans			1,031.9				1,762.3				1,750.8
Operating lease equipment, net			9,594.3				9,765.2				8,822.7
Assets held for sale			723.8				34.7				234.5
Financing and leasing assets			11,350.0				11,562.2				10,808.0
Rail
Loans			118.1				120.9				126.7
Operating lease equipment, net			6,778.8				6,592.8				5,800.1
Assets held for sale			0.4				0.7				1.0
Financing and leasing assets			6,897.3				6,714.4				5,927.8
Maritime Finance
Loans			1,636.7				1,658.9				1,066.6
Assets held for sale			30.5				19.5				19.1
Financing and leasing assets			1,667.2				1,678.4				1,085.7
Total Segment
Loans			2,786.7				3,542.1				2,944.1
Operating lease equipment, net			16,373.1				16,358.0				14,622.8
Assets held for sale			754.7				54.9				254.6
Financing and leasing assets			19,914.5				19,955.0				17,821.5
Consumer and Community Banking
Other Consumer Banking
Loans			1,879.5				1,770.0				-
Assets held for sale			2.6				3.9				-
Financing and leasing assets			1,882.1				1,773.9				-
Legacy Consumer Mortgages
Loans			5,305.2				5,430.4				-
Assets held for sale			48.0				41.2				-
Financing and leasing assets			5,353.2				5,471.6				-
Total Segment
Loans			7,184.7				7,200.4				-
Assets held for sale			50.6				45.1				-
Financing and leasing assets			7,235.3				7,245.5				-
Non-Strategic Portfolios
Loans			-				-				1,426.3
Operating lease equipment, net			-				-				39.6
Assets held for sale			1,176.2				1,577.5				709.7
Financing and leasing assets			1,176.2				1,577.5				2,175.6
Total financing and leasing assets		$	50,285.5			$	50,381.1			$	35,369.0

 

 

CIT GROUP INC. AND SUBSIDIARIES

Credit Metrics

(dollars in millions)

                         

 

		Quarters Ended
		March 31, 2016								December 31, 2015								March 31, 2015
Gross Charge-offs to Average Finance Receivables
Transportation Finance(1)		$	19.6				2.35	%		$	0.9				0.10	%		$	-				-
Commercial Banking(2)			35.8				0.68	%			37.0				0.69	%			22.6				0.60	%
Consumer and Community Banking			0.7				0.04	%			(0.3	)			-0.02	%			-				-
Non-Strategic Portfolios			-				-				0.2				-				4.0				1.10	%
Total CIT		$	56.1				0.71	%		$	37.8				0.47	%		$	26.6				0.55	%
		Quarters Ended
		March 31, 2016								December 31, 2015								March 31, 2015
Net Charge-offs to Average Finance Receivables
Transportation Finance(1)		$	19.6				2.35	%		$	0.8				0.09	%		$	-				-
Commercial Banking(2)			31.8				0.60	%			31.8				0.59	%			19.3				0.52	%
Consumer and Community Banking			(0.1	)			-0.01	%			(0.9	)			-0.05	%			-				-
Non-Strategic Portfolios			-				-				0.2				-				1.6				0.44	%
Total CIT		$	51.3				0.65	%		$	31.9				0.40	%		$	20.9				0.43	%
Non-accruing Loans to Finance Receivables(3)		March 31, 2016								December 31, 2015								March 31, 2015
Transportation Finance		$	21.7				0.78	%		$	15.4				0.43	%		$	0.1				0.00	%
Commercial Banking			215.2				1.00	%			191.1				0.91	%			104.6				0.69	%
Consumer and Community Banking			7.1				0.10	%			5.2				0.07	%			-				-
Non-Strategic Portfolios(3)			51.1				(3	)			56.0				(3	)			78.8				5.52	%
Total CIT		$	295.1				0.94	%		$	267.7				0.85	%		$	183.5				0.94	%

 

PROVISION AND ALLOWANCE COMPONENTS
		Provision for Credit Losses
		Quarters Ended
		March 31,				December 31,				March 31,
		2016				2015				2015
Specific allowance - impaired loans		$	21.8			$	0.9			$	2.4
Non-specific allowance			26.2				24.8				11.3
Net charge-offs			51.3				31.9				20.9
Totals		$	99.3			$	57.6			$	34.6
		Allowance for Loan Losses
		March 31,				December 31,				March 31,
		2016				2015				2015
Specific allowance - impaired loans		$	40.2			$	27.8			$	14.8
Non-specific allowance			364.4				332.4				341.7
Totals		$	404.6			$	360.2			$	356.5
Allowance for loan losses as a percentage of total finance receivables			1.29	%			1.14	%			1.83	%
Allowance for loan losses as a percent of finance receivables/Commercial			1.61	%			1.43	%			1.83	%
Allowance for loan losses plus principal loss discount as a percent of finance receivables (before the principal loss discount)/Commercial			1.87	%			1.79	%			1.83	%
Allowance for loan losses plus principal loss discount as a percent of finance receivables (before the principal loss discount)/Consumer			7.86	%			8.62	%			-

 

In certain instances, we use the term finance receivables synonymously with “Loans”, as presented on the balance sheet.

1) Transportation Finance charge-offs related to the transfer of receivables to assets held for sale for the quarter ended March 31, 2016 totaled $7 million, and none in the other quarters presented.

2) Commercial Banking charge-offs related to the transfer of receivables to assets held for sale for the quarters ended March 31, 2016, December 31, 2015 and March 31, 2015 totaled $2 million, $19 million and $11 million, respectively.

3) Non-accrual loans include loans held for sale. NSP non-accrual loans reflected loans held for sale; since portfolio loans were insignificant, no % is displayed.

 

 

CIT GROUP INC. AND SUBSIDIARIES

Segment Results

(dollars in millions)

 

		Quarters Ended
		March 31,				December 31,				March 31,
		2016				2015				2015
Commercial Banking
Total interest income		$	287.1			$	285.5			$	181.3
Total interest expense			(73.6	)			(68.1	)			(64.8	)
Provision for credit losses			(73.5	)			(45.4	)			(24.4	)
Rental income on operating leases			27.1				25.8				23.1
Other income			55.5				68.9				63.6
Depreciation on operating lease equipment			(20.0	)			(18.8	)			(17.2	)
Operating expenses			(158.4	)			(146.0	)			(131.3	)
Income before provision for income taxes		$	44.2			$	101.9			$	30.3
Funded new business volume		$	1,581.4			$	2,164.7			$	1,296.2
Average Earning Assets		$	20,727.0			$	20,944.0			$	14,356.5
Average Finance Receivables		$	21,130.8			$	21,463.2			$	14,985.5
Transportation Finance
Total interest income		$	52.7			$	49.8			$	42.7
Total interest expense			(148.1	)			(143.4	)			(150.6	)
Provision for credit losses			(22.7	)			(8.6	)			(6.4	)
Rental income on operating leases			544.5				518.2				496.7
Other income			18.8				24.8				35.4
Depreciation on operating lease equipment			(155.3	)			(148.0	)			(136.0	)
Maintenance and other operating lease expenses			(56.2	)			(79.6	)			(46.1	)
Operating expenses / loss on debt extinguishment			(60.7	)			(50.2	)			(67.2	)
Income before provision for income taxes		$	173.0			$	163.0			$	168.5
Funded new business volume		$	245.9			$	1,619.5			$	419.5
Average Earning Assets		$	20,619.5			$	19,784.2			$	18,880.8
Average Finance Receivables		$	3,333.4			$	3,446.7			$	2,928.8
Consumer and Community Banking
Total interest income		$	103.2			$	109.5			$	-
Total interest expense			(8.9	)			(13.2	)			-
Provision for credit losses			(3.1	)			(3.6	)			-
Other income			8.1				5.3				-
Operating expenses			(82.2	)			(84.7	)			-
Income before provision for income taxes		$	17.1			$	13.3			$	-
Funded new business volume		$	214.5			$	220.3			$	-
Average Earning Assets		$	7,757.8			$	7,845.9			$	-
Average Finance Receivables		$	7,160.4			$	7,204.8			$	-
Non-Strategic Portfolios
Total interest income		$	25.0			$	39.6			$	52.8
Total interest expense			(14.5	)			(22.0	)			(38.0	)
Provision for credit losses			-				-				(3.8	)
Rental income on operating leases			3.8				6.9				10.8
Other income			14.5				(54.4	)			(6.2	)
Depreciation on operating lease equipment			-				-				(3.6	)
Operating expenses			(12.2	)			(26.2	)			(37.0	)
Income (loss) before provision for income taxes		$	16.6			$	(56.1	)		$	(25.0	)
Funded new business volume		$	44.3			$	167.0			$	201.4
Average Earning Assets		$	1,516.8			$	1,953.8			$	2,718.4
Average Finance Receivables		$	-			$	-			$	1,457.6
Corporate and Other
Total interest income		$	27.4			$	26.0			$	4.2
Total interest expense			(41.3	)			(40.0	)			(17.9	)
Other income			4.0				(14.2	)			(6.4	)
Operating expenses / loss on debt extinguishment			(36.6	)			(52.9	)			(6.1	)
Loss before provision for income taxes		$	(46.5	)		$	(81.1	)		$	(26.2	)
Average Earning Assets		$	8,585.3			$	8,613.5			$	5,885.4
Total CIT
Total interest income		$	495.4			$	510.4			$	281.0
Total interest expense			(286.4	)			(286.7	)			(271.3	)
Provision for credit losses			(99.3	)			(57.6	)			(34.6	)
Rental income on operating leases			575.4				550.9				530.6
Other income			100.9				30.4				86.4
Depreciation on operating lease equipment			(175.3	)			(166.8	)			(156.8	)
Maintenance and other operating lease expenses			(56.2	)			(79.6	)			(46.1	)
Operating expenses / loss on debt extinguishment			(350.1	)			(360.0	)			(241.6	)
Income from continuing operations before provision for income taxes		$	204.4			$	141.0			$	147.6
Funded new business volume		$	2,086.1			$	4,171.5			$	1,917.1
Average Earning Assets		$	59,206.4			$	59,141.4			$	41,841.1
Average Finance Receivables		$	31,624.6			$	32,114.7			$	19,371.9

 

 

CIT GROUP INC. AND SUBSIDIARIES

Segment Margin

(dollars in millions)

             

 

		Quarters Ended
		March 31,				December 31,				March 31,
		2016				2015				2015
Commercial Banking
Total Segment
AEA		$	20,727.0			$	20,944.0			$	14,356.5
Net Finance Revenue			220.6				224.4				122.4
Gross yield			6.06	%			5.95	%			5.69	%
Net Finance Margin			4.26	%			4.29	%			3.41	%
Average Earning Assets (AEA)
Commercial Finance		$	9,545.4			$	9,979.3			$	6,706.4
Real Estate Finance			5,334.6				5,159.2				1,777.7
Business Capital			5,847.0				5,805.5				5,872.4
Net Finance Revenue
Commercial Finance			90.6				98.5				44.0
Real Estate Finance			54.4				51.4				10.0
Business Capital			75.6				74.5				68.4
Gross yield
Commercial Finance			5.03	%			5.08	%			4.41	%
Real Estate Finance			5.44	%			5.23	%			3.94	%
Business Capital			8.32	%			8.07	%			7.69	%
Net Finance Margin
Commercial Finance			3.80	%			3.95	%			2.62	%
Real Estate Finance			4.08	%			3.99	%			2.25	%
Business Capital			5.17	%			5.13	%			4.66	%
Transportation Finance
Total Segment
AEA		$	20,619.5			$	19,784.2			$	18,880.8
Net Finance Revenue			237.6				197.0				206.7
Gross yield			11.59	%			11.48	%			11.43	%
Net Finance Margin			4.61	%			3.98	%			4.38	%
Average Earning Assets (AEA)
Aerospace		$	12,050.9			$	11,594.3			$	11,907.7
Rail			6,882.4				6,599.3				5,923.9
Maritime Finance			1,686.2				1,590.6				1,049.2
Net Finance Revenue
Aerospace		$	119.6			$	92.8			$	101.7
Rail			100.2				89.0				96.2
Maritime Finance			17.8				15.2				8.8
Gross yield
Aerospace			11.18	%			11.07	%			10.41	%
Rail			13.73	%			13.71	%			14.64	%
Maritime Finance			5.75	%			5.24	%			5.00	%
Net Finance Margin
Aerospace			3.97	%			3.20	%			3.42	%
Rail			5.82	%			5.39	%			6.50	%
Maritime Finance			4.25	%			3.82	%			3.35	%
Consumer and Community Banking
Total Segment
AEA		$	7,757.8			$	7,845.9			$	-
Net Finance Revenue			94.3				96.3				-
Gross yield			5.32	%			5.58	%			-
Net Finance Margin			4.86	%			4.91	%			-
Average Earning Assets (AEA)
Other Consumer Banking		$	1,941.8			$	1,840.5			$	-
Legacy Consumer Mortgages			5,816.0				6,005.4				-
Net Finance Revenue
Other Consumer Banking		$	34.0			$	28.4			$	-
Legacy Consumer Mortgages			60.3				67.9				-
Gross yield
Other Consumer Banking			3.65	%			3.78	%			-
Legacy Consumer Mortgages			5.87	%			6.13	%			-
Net Finance Margin
Other Consumer Banking			7.00	%			6.17	%			-
Legacy Consumer Mortgages			4.15	%			4.52	%			-
Non-Strategic Portfolios
AEA		$	1,516.8			$	1,953.8			$	2,718.4
Net Finance Revenue			14.3				24.5				22.0
Gross yield			7.59	%			9.52	%			9.36	%
Net Finance Margin			3.77	%			5.02	%			3.24	%

 

Gross Yield includes interest income and rental income as a % of AEA.

Net Finance Margin (NFM) reflects Net Finance Revenue divided by AEA. 

 

 

CIT GROUP INC. AND SUBSIDIARIES

Non-GAAP Disclosures

(dollars in millions)

                           

 

Non-GAAP financial measures disclosed by management are meant to provide additional information and insight relative to business trends to investors and, in certain cases, to present financial information as measured by rating agencies and other users of financial information.  These measures are not in accordance with, or a substitute for, GAAP and may be different from, or inconsistent with, non-GAAP financial measures used by other companies.

 

		Quarters Ended
		March 31,				December 31,				March 31,
Total Net Revenues(1)		2016				2015				2015
Interest income		$	495.4			$	510.4			$	281.0
Rental income on operating leases			575.4				550.9				530.6
Finance revenue			1,070.8				1,061.3				811.6
Interest expense			(286.4	)			(286.7	)			(271.3	)
Depreciation on operating lease equipment			(175.3	)			(166.8	)			(156.8	)
Maintenance and other operating lease expenses			(56.2	)			(79.6	)			(46.1	)
Net finance revenue (NFR)			552.9				528.2				337.4
Other income			100.9				30.4				86.4
Total net revenues		$	653.8			$	558.6			$	423.8
NFR as a % of AEA			3.74	%			3.57	%			3.23	%
Net Operating Lease Revenues(2)
Rental income on operating leases		$	575.4			$	550.9			$	530.6
Depreciation on operating lease equipment			(175.3	)			(166.8	)			(156.8	)
Maintenance and other operating lease expenses			(56.2	)			(79.6	)			(46.1	)
Net operating lease revenue		$	343.9			$	304.5			$	327.7

 

		March 31,				December 31,				March 31,
Earning Assets(3)		2016				2015				2015
Loans		$	31,408.6			$	31,671.7			$	19,429.3
Operating lease equipment, net			16,665.7				16,617.0				14,887.8
Assets held for sale			2,211.2				2,092.4				1,051.9
Credit balances of factoring clients			(1,361.0	)			(1,344.0	)			(1,505.3	)
Interest bearing cash			7,135.0				6,820.3				5,393.4
Investment securities			2,896.8				2,953.8				1,347.4
Securities purchased under agreements to resell			-				-				450.0
Indemnification assets			389.4				414.8				-
Total earning assets		$	59,345.7			$	59,226.0			$	41,054.5
Average Earning Assets (for the respective quarters)		$	59,206.4			$	59,141.4			$	41,841.1
		Quarters Ended
		March 31,				December 31,				March 31,
Adjusted Operating Expenses		2016				2015				2015
Operating expenses		$	(348.5	)		$	(357.8	)		$	(241.6	)
Provision for severance and facilities exiting activities			20.3				53.0				(1.0	)
Intangible assets amortization			6.4				7.2				0.6
Operating expenses exclusive of restructuring costs and intangible assets amortization(4)		$	(321.8	)		$	(297.6	)		$	(242.0	)
Operating expenses (exclusive of restructuring costs and intangible assets amortization) as a % of AEA			(2.17%	)			(2.01%	)			(2.31%	)
Total Net Revenue		$	653.8			$	558.6			$	423.8
Operating expenses exclusive of restructuring costs and intangible assets amortization(4)		$	(321.8	)		$	(297.6	)		$	(242.0	)
Net Efficiency Ratio(5)			49.2	%			53.3	%			57.1	%
		March 31,				December 31,				March 31,
		2016				2015				2015
Continuing Operations Total Assets(6)
Total Assets		$	67,097.6			$	67,401.5			$	46,294.8
Assets of discontinued operation			(489.5	)			(500.5	)			-
Continuing operations total assets		$	66,608.1			$	66,901.0			$	46,294.8
		March 31,				December 31,				March 31,
Tangible Book Value(7)		2016				2015				2015
Total common stockholders' equity		$	11,125.8			$	10,978.1			$	8,758.6
Less: Goodwill			(1,195.1	)			(1,198.3	)			(563.6	)
Intangible assets			(170.3	)			(176.3	)			(23.2	)
Tangible book value			9,760.4				9,603.5				8,171.8
Less: Disallowed deferred tax asset			(873.9	)			(904.5	)			(358.3	)
Adjusted tangible common equity(8)		$	8,886.5			$	8,699.0			$	7,813.5
Average adjusted tangible common equity		$	8,825.1			$	8,675.5			$	7,917.7

 

(1)  Total net revenues are the combination of net finance revenue and other income and is an aggregation of all sources of revenue for the Company. Total net revenues are used by management to monitor business performance.

(2)  Total net operating lease revenues are the combination of rental income on operating leases less depreciation on operating lease equipment and maintenance and other operating lease expenses. Total net operating lease revenues are used by management to monitor portfolio performance.

(3)  Earning assets are utilized in certain revenue and earnings ratios. Earning assets are net of credit balances of factoring clients. This net amount represents the amounts we fund.

(4) Operating expenses exclusive of restructuring costs and intangible amortization is a non-GAAP measure used by management to compare period over period expenses.

(5) Net efficiency ratio is a non-GAAP measurement used by management to measure operating expenses (before restructuring costs and intangible amortization) to the level of total net revenues.

(6) Total assets from continuing operations is a non-GAAP measurement used by management to analyze the total asset change on a more consistent basis.

(7) Tangible book value is a non-GAAP measure, which represents an adjusted common shareholders’ equity balance that has been reduced by goodwill and intangible assets. Tangible book value is used to compute a per common share amount, which is used to evaluate our use of equity.

(8) Return on average tangible common equity is adjusted to remove the impact of intangible amortization, goodwill impairment and the impact from valuation allowance reversals from income from continuing operations, while the average tangible equity is reduced for disallowed deferred tax assets. Return on average tangible common equity is another metric used to evaluate our use of equity.

 

 

Exhibit 99.2

 

First Quarter 2016 Financial Results April 28, 2016

1 Important Notices This presentation 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,” and “continue,” or the negative of any of those words or similar expressions are intended to identify forward - looking statements . All statements contained in this presentation, 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 implementing its strategy and business plan, the risk that CIT is unable to react to and address key business and regulatory issues, the risk that CIT is unable to achieve the projected revenue growth from its new business initiatives or the projected expense reductions from efficiency improvements, and the risk that CIT becomes subject to liquidity constraints and higher funding costs . We describe these and other risks that could affect our results in Item 1 A, “Risk Factors,” of our latest Annual Report on Form 10 - K for the year ended December 31 , 2015 , which was filed with the Securities and Exchange Commission . Accordingly, you should not place undue reliance on the forward - looking statements contained in this presentation . 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 . This presentation is to be used solely as part of CIT management’s continuing investor communications program . This presentation shall not constitute an offer or solicitation in connection with any securities . | 1Q16 Earnings

2 Executing on Our 2016 Priorities 1 Focus on Our Core Businesses 3 Maintain Strong Risk Management | 1Q16 Earnings 2 Improve Profitability and Return Capital (1) Commercial allowance for loan losses plus principal loss discount as % of commercial finance receivables (before the prin cip al loss discount). (2) Reflects the purchase accounting discount for loans acquired from OneWest Bank and the allowance for loan losses. ▪ Completed U.K. exit ▪ Commercial Air separation, Canada and China business exits progressing ▪ Transferred international Business Air portfolio into assets held for sale (AHFS) ▪ Commercial Banking financing and leasing assets grew 2% from a quarter ago ▪ Deposits represent approximately 65% of total funding; deposit costs remain stable ▪ 1:1 ratio of financing and leasing assets to deposits in the Bank ▪ Further reduced layers & improved efficiencies in corporate functions ▪ Commercial credit reserve (1) 1.9% of finance receivables ▪ Non - accruals 0.9% of finance receivables ▪ 12% coverage (2) on energy loans ▪ Common Equity Tier 1 ratio 13.1% ▪ CCAR submitted in April

3 Key Performance Metrics (1) As % of average earnings assets . (2) Operating expenses exclusive of restructuring costs and intangible assets amortization. (3) Total operating expenses exclusive of restructuring charges and amortization of intangibles divided by total revenue (net finance margin and other income). (4) Capital ratios are preliminary as of 3/31/16 and based on fully phased - in Basel III estimates. (5) Return on average tangible common equity is adjusted to remove the impact of intangible amortization, goodwill impairment and th e impact from valuation allowance reversals from income from continuing operations, while the average tangible common equity is reduced for disallowed deferred tax assets. See Appendix page 20 for calculation. 4Q15 1Q16 2016 Outlook Commentary Post Air Separation 2018 Target Net Finance Margin (1) 3.6% 3.7% ▪ Expect to trend towards 3.5% 3.0 – 3.5% Credit provision (1) 0.4% 0.7% ▪ Elevated in current quarter due to energy & maritime portfolios and discrete charge - offs in Aerospace loans ▪ Expect to be in the high end of the range 0.25 – 0.50% Other income (1) 0.2% 0.7% ▪ Continued variability from strategic initiatives 0.6 – 0.75% Operating Expenses (1)(2) 2.0% 2.2% ▪ Implementation of $125 million cost reduction program fully underway ▪ Benefits of cost reduction plan expected to be offset by strategic initiative costs ▪ 1Q16 Net efficiency ratio included net revenue benefit from strategic initiatives 1.9 – 2.2% Net Efficiency Ratio (3) 53.3% 49.2% Low 50s Tax Rate (7%) 26% ▪ Low 30% range excluding discrete items <40% CET1 Ratio (4) 12.7% 13.1% - 10 – 11% Adjusted ROATCE (5) 7.1% 7.1% - 10% | 1Q16 Earnings

4 (1) Includes U.S . VA reversal impact of $647 million, $3.37 diluted EPS in 3Q15. (2) Average earning assets (AEA) components include interest earning cash, investments, securities and indemnification assets, loans and operating lease equip men t. (3) Excluding transaction costs, 3Q15 net efficiency ratio of 57.6%. Total o perating e xpenses exclusive of r estructuring charges and amortization of intangibles divided by total revenue (Net finance margin and other income). (4) Average finance receivables (AFR) is computed using month - end balances and is the average of finance receivables which inclu des loans, direct finance lease and leverage lease receivables and factoring receivables. It excludes operating lease equipment. (5 ) Beginning in 3Q15 , the ratio is calculated to include the impact of the principal loss discount associated with acquired OneWest receivables and is ALL plus principal loss discount on Commercial loans divided by Commercial Finance Receivables before the impact of the principal loss discount. (6) Capital ratios are preliminary as of 3/31/16 and based on fully phased - in Basel III estimates. At or For the Period Ended 1Q16 4Q15 3Q15 2Q15 1Q15 EPS (Diluted) – Total (1) $0.73 $0.72 $3.61 $0.66 $0.59 EPS (Diluted) – Continuing Ops. (1) $0.75 $0.75 $3.63 $0.66 $0.59 EPS (Diluted) impact from VA Reversal - - $3.37 - - Book Value Per Share $55.16 $54.61 $53.74 $50.91 $50.26 Tangible Book Value Per Share (TVBPS) $48.39 $47.77 $47.09 $47.51 $46.89 Pre - tax r eturn on Average Earning Assets (ROAEA) (2) 1.38% 0.95% 1.04% 1.49% 1.41% After - tax r eturn on Average Earning Assets (ROAEA) (2) 0.99% 0.98% 5.29% 1.12% 0.99% Net Finance Margin 3.74% 3.57% 3.67% 3.34% 3.23% Net Efficiency Ratio (3) 49.2% 53.3% 62.2% 57.4% 57.1% Adjusted ROATCE – Continuing Ops. 7.1% 7.1% 2.6% 5.9% 5.3% Net Charge - offs (% of AFR (4) ) 0.65% 0.40% 0.86% 0.48% 0.43% A llowance for loan losses as % of Finance Receivables for Commercial assets (5) 1.87% 1.79% 1.82% 1.79% 1.83% CET1 Ratio/Tier 1 Capital Ratio 13.1% 12.7% 12.5% 14.4% 14.1% Total Capital Ratio 13.7% 13.2% 13.0% 15.1% 14.8% Performance Highlights & Trends | 1Q16 Earnings

5 ($ Millions, except per share data) Noteworthy Items in 1Q16 Items in 1Q16 Results Reported Diluted EPS (Continuing) $0.75 Impact Segment Item Line Item Total Pre - tax After tax Per share NSP Gain on Sale – U.K. Other Income $24 $15 $0.08 Corporate Restructuring Expenses Operating Expenses ($20) ($13) ($0.06) Corporate Discrete Tax Benefit Tax Provision - $13 $0.06 NSP Asset Impairment Other Income ($11) ($8) ($0.04) NSP Liquidating Europe CTA (1) Other Income ($3) ($3) ($0.02) EPS based on 202.1 million average diluted shares outstanding, $ impacts are rounded. | 1Q16 Earnings (1) Currency translation adjustment.

6 Financing & Leasing Assets (FLA) Highlights 15.4 15.4 22.3 21.6 22.0 17.8 18.3 18.7 20.0 19.9 7.3 7.2 7.2 2.2 2.1 1.8 1.6 1.2 0 20 40 60 1Q15 2Q15 3Q15 4Q15 1Q16 ($ Billions) | 1Q16 Earnings ▪ Total FLA remains stable as new originations have offset portfolio sales and run - off ▪ Commercial Banking: G rew 2%, primarily due to growth in Commercial Finance and Business Capital ▪ Transportation Finance: Placed international business air loans of $700 million into AHFS ▪ Consumer and Community Banking: Legacy Consumer Mortgages annualized run - off of 11% in the quarter was offset by growth in other consumer banking originations Consumer and Community Banking Transportation Finance Commercial Banking Non - Strategic Portfolios $35.4 $35.8 $50.1 $50.4 $50.3 Total Reported

7 ▪ Net Finance Revenue reflects increase in earning assets from OneWest acquisition in 3Q 2015 ▪ Other items primarily include purchase accounting accretion based on unpaid principal balance of the loans (vs. OneWest’s carrying value) ▪ Increase in Net Finance Margin from prior quarter reflects : + ~25 bps Transportation Finance + ~10 bps elevated from collections on remarketed aircrafts and prepayments on loans + ~15 bps benefit from lower operating lease maintenance/expense in both Air & Rail - ~10 bps reduction from loan mix primarily due to run - off in NSP and Consumer and Community Banking segments ▪ Rail – Impact from reduced utilization was offset by interim rent benefit (~ 3 bps ) 329 335 421 447 482 3.23% 3.33% 3.67% 3.57% 3.74% 1Q15 2Q15 3Q15 4Q15 1Q16 Net Finance Revenue less other items Other Items NFM Net Finance Margin Trends – (Continuing Operations) ($ Millions) Yield Analysis (2) 1Q16 4Q15 1Q15 bps 4Q15 bps 1Q15 Interest bearing deposits and investments 1.24% 1.21% 0.43% 0.03% 0.81% Loans 5.84 5.90 5.84 (0.06) - Operating leases (net) 8.23 7.58 8.63 0.65 (0.40) Indemnification assets (3.08) (0.72) - (2.36) (3.08) Earning assets 5.67 5.51 5.82 0.16 (0.15) Deposits 1.25 1.26 1.70 (0.01) (0.45) Borrowings 4.11 3.99 4.63 0.12 (0.52) Interest - bearing liabilities 2.29 2.28 3.22 0.01 (0.93) Net Finance Revenue & Net Finance Margin 337 343 482 528 (1) Other items include suspended depreciation, interest recoveries/prepayments and other loan and debt FSA. 1Q16, 4Q15 and 3 Q15 other items also includes purchase accounting accretion. (2) More detail is available in the average balance sheet within the first quarter 2016 press release. (1) Highlights | 1Q16 Earnings 553

8 30 27 31 29 26 23 25 30 35 33 32 22 31 17 11 2 (10) (52) (50) 31 -55 -30 -5 20 45 70 95 120 145 Other Income Trends – Components (Continuing Operations) Factoring commissions Fee revenues Gains on sales of leasing equipment All other income ($ Millions) 1 Q15 3 Q15 4 Q 15 1 Q16 2 Q15 Total Reported ▪ Lower gains on sales of leasing equipment driven by lower sales activity ▪ All other income primarily reflects: ▪ Gain on U.K. sale of $24 million ▪ TRS mark - to - market benefit of $18 million ▪ NSP asset impairment of $11 million Highlights $86 $64 $39 $30 $101 | 1Q16 Earnings

9 Asset Quality Trends – (Continuing Operations) ($ Millions) 184 198 215 268 295 0.4% 0.5% 0.9% 0.4% 0.7% 1Q15 2Q15 3Q15 4Q15 1Q16 Non-accrual Loans Net Charge-offs % to AFR 357 351 334 350 390 1.8% 1.8% 1.3% 1.4% 1.6% 1.8% 1.8% 1.8% 1.9% 1Q15 2Q15 3Q15 4Q15 1Q16 Princ. Loss Disc Allowance for Loan Losses (ALL) ALL % to FR ALL + Princ Loss Disc. % to FR before principle loss discount (1) (1) 1Q16, 4Q15, 3Q15, 2Q15, and 1Q15, included approximately $9 million, $19 million, $40 million, $ 2 million and $11 million respectively, of charge - offs related to the transfer of loans to held for sale; exclusive of these charge - offs, net charge - offs as a % to AFR would have been 53 bps, 16 bps, 1 7 bps, 44 bps and 20 bps respectively. (2) Reflects the purchase accounting discount for loans acquired from OneWest Bank and the allowance for loan losses. Non - accrual Loans & Net Charge - offs Allowance for Loan Losses - Commercial ▪ N on - accrual balances increased primarily due to energy (oil & gas) ▪ If current market conditions persist, CIT could experience an additional ~ $100 million in energy related non - accruals for the remainder of 2016 ▪ Resulting in an incremental provision of ~$30 - 40 million ▪ Allowance for loan losses increased due to reserve build primarily in energy and maritime ▪ Net Charge - offs increased primarily driven by $15 million in the energy portfolio and $11 million related to two Aerospace loans ▪ ALL as a % of finance receivables on commercial loans increased to 1.6% ▪ Including the principal loss discount, ALL as a % of finance receivables is 1.9% ▪ 12% coverage (2) on energy loans – see page 15 for more detail Highlights | 1Q16 Earnings Non - accrual Loans % of AFR 0.9% 1.0% 0.7% 0.9% 0.9%

10 ▪ 3Q15 included two months of OneWest Bank operating expenses; all periods thereafter reflect full impact ▪ Progress on cost reduction initiatives in 2016 will be offset by higher costs related to strategic initiatives (e.g. OneWest Ban k Integration & Commercial Air Separation) All Other Operating Expenses Costs Related to OneWest Acquisition & Other Strategic Initiatives Amortization of Intangibles Restructuring Charges Operating Expenses Trends – (Continuing Operations) ($ Millions) (1) Total operating e xpenses exclusive of restructuring charges and amortization of intangibles divided by t otal r evenue (Net finance margin and other i ncome). Excluding transaction costs, net efficiency ratio of 57.6% in 3Q15. (2) Include reversal of accrued compensation and benefits of $19 million and other general administrative expenses of $8 mill ion . (3) Seasonally elevated 1Q16 employee costs contain annual benefit restarts and the cost associated with deferred incentive c omp ensation for retirement eligible employees. Highlights 57.1% 57.4% 62.2% 53.3% 49.2% Net Efficiency Ratio (1) | 1Q16 Earnings 237 226 292 283 312 5 7 32 15 10 242 235 334 358 349 1Q15 2Q15 3Q15 4Q15 1Q16 1Q16 Walk 283 310 312 15 15 10 4Q15 Adjustments 4Q15 Normalized Seasonally Elevated Employee Costs Cost Reduction Initiatives NSP Exits OWB & Other Strategic Initiatives 1Q16 27 15 (5) (8) 298 325 322 (2) (5) (3)

11 Commercial Banking $ Inc/ (Dec) ($ in millions) 1Q16 4Q15 1Q15 4Q15 1Q15 Interest Income 287 286 181 2 106 Net Rental Income 7 7 6 - 1 Interest Expense 74 68 65 6 9 Net Finance Revenue 221 224 122 (4) 98 Other Income 56 69 64 (13) (8) Credit Provision 74 45 24 28 49 Operating Expenses 158 146 131 12 27 Pre - tax Income 44 102 30 (58) 13 ▪ Net Finance Revenue decreased due to decline in average earning assets and higher funding costs ▪ Credit Provision increased driven by new business volume and increase in reserves related to the energy portfolio ▪ Operating Expenses increased reflecting higher litigation expense in Commercial Finance and discrete items related to Business Capital ▪ Prior year comparisons are impacted by the OneWest Bank acquisition in 3Q15 which resulted in lower interest expense and improved NFM Key Metrics 1Q16 4Q15 1Q15 4Q15 1Q15 AEA 20,727 20,944 14,357 (217) 6,371 NFM 4.3% 4.3% 3.4% - 0.9% Net Efficiency Ratio 56.8% 49.0% 70.3% (7.8%) 13.5% PTI - ROAEA 0.9% 2.0% 0.8% (1.1%) - | 1Q16 Earnings 1Q15 does not reflect OneWest Bank results. Certain balances may not sum due to rounding. vs. Prior Quarter vs. Year - ago Quarter Commentary

12 Commentary $ Inc/ (Dec) ($ in millions) 1Q16 4Q15 1Q15 4Q15 1Q15 Interest Income 53 50 43 3 10 Net Rental Income 390 370 361 20 29 Interest Expense 148 143 151 5 (3) Maintenance & Other 56 80 46 (23) 10 Net Finance Revenue 238 197 207 41 31 Other Income 19 25 35 (6) (17) Credit Provision 23 9 6 14 16 Operating Expenses 61 50 67 11 (7) Pre - tax Income 173 163 169 10 5 ▪ Net Finance Revenue increased reflecting higher rental income driven by higher average operating lease assets, lower maintenance and other operating lease expense ▪ Credit Provision increased primarily due to reserve increases in Maritime and discrete charge - offs of Aerospace loans ▪ Operating Expenses increased reflecting seasonally higher employee costs and approximately $4 million of costs related to the C ommercial A ir separation initiative ▪ Net Finance Revenue increased due to similar drivers noted in the prior quarter and lower funding costs ▪ Other Income decreased reflecting lower gains from asset sales ▪ Credit Provision increased primarily due to the Maritime exposure Key Metrics 1Q16 4Q15 1Q15 4Q15 1Q15 AEA 20,620 19,784 18,881 835 1,739 NFM 4.6% 4.0% 4.4% 0.6% 0.2% Net Efficiency Ratio 23.7% 22.1% 27.7% (1.6%) 4.0% PTI - ROAEA 3.4% 3.3% 3.6% 0.1% (0.2%) | 1Q16 Earnings Transportation Finance Certain balances may not sum due to rounding. vs. Prior Quarter vs. Year - ago Quarter

13 Commentary $ Inc/ (Dec) ($ in millions) 1Q16 4Q15 1Q15 4Q15 1Q15 Interest Income 103 110 - (6) 103 Interest Expense 9 13 - (4) 9 Net Finance Revenue 94 96 - (2) 94 Other Income 8 5 - 3 8 Credit Provision 3 4 - (1) 3 Operating Expenses 82 85 - (3) 82 Pre - tax Income 17 13 - 4 17 ▪ Pre - Tax Income increased primarily due to an increase in other income, resulting from gain on OREO sales, and lower legal expenses ▪ Prior year comparisons are impacted by the OneWest Bank acquisition in 3Q15 Key Metrics 1Q16 4Q15 1Q15 4Q15 1Q15 AEA 7,758 7,846 - (88) 7,758 NFM 4.9% 4.9% - - 4.9% Net Efficiency Ratio 75.8% 78.8% - (3.0%) 75.8% PTI - ROAEA 0.9% 0.7% - 0.2% 0.9% | 1Q16 Earnings Consumer and Community Banking 1Q15 does not reflect OneWest Bank results. Certain balances may not sum due to rounding. vs. Prior Quarter vs. Year - ago Quarter

14 14.8% 15.1% 13.0% 13.2% 13.7% 14.1% 14.4% 12.5% 12.7% 13.1% 17.1% 17.1% 15.1% 13.4% 13.8% 1Q15 2Q15 3Q15 4Q15 1Q16 Total Capital Ratio CET1 Ratio Tier 1 Leverage Ratio Strong Capital Position 8.2 8.2 9.5 9.6 9.8 8.0 8.0 8.8 8.9 9.1 1Q15 2Q15 3Q15 4Q15 1Q16 TBV CET1 Capital Tangible Book Value / CET1 Risk Based Capital Ratios (1) ▪ Total capital comprised mostly of high quality CET1 capital ▪ All regulatory capital ratios increased sequentially reflecting current period earnings and a reduction in RWA ▪ RWA reduction reflects the mix of assets Highlights | 1Q16 Earnings (1) Capital ratios are preliminary as of 3/31/16 and based on fully phased - in Basel III estimates. ($ Billions) 56.3 55.7 70.3 70.2 69.3 1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 Risk Weighted Assets (RWA) ($ Billions)

15 Exposure to Energy – Oil & Gas Loans ($ Billions) (1) Reflects the purchase accounting discount for loans acquired from OneWest Bank and the allowance for loan losses. (2) Criticized % at 4Q15: E&P 31%, Midstream 4%, Energy Services 42%. | 1Q16 Earnings Outstanding Utilization Criticized (2) Commentary E & P $444 68% 66% ▪ Geographically diversified across the major producing basins ▪ Oil 43%/Gas 57% Midstream $265 62% 2% ▪ Long - lived infrastructure that store and transport essential commodity products Energy Services $236 65% 45% ▪ Geographically diversified across the major producing basins ▪ Almost all loans are asset based Total Loans: $31.4 Energy: ~$0.9 (~3% of Total Loans) Commercial $23.3 Consumer $7.2 Midstream $0.3 Energy Services $0.2 Exploration & Production $0.4 ▪ $945 million or ~3% of total loans ▪ Loss coverage of 12% ( 1) ▪ ~42% of loans are Criticized ▪ 65% Utilization ▪ Non - accruals of ~$140 million – 94% current ▪ 89 % are Shared National Credits ▪ Less than 5% are Leveraged Loans ▪ Majority of portfolio is secured by: ▪ Traditional reserve - based lending assets ▪ Working capital assets ▪ Long - lived fixed assets ($ Millions)

16 APPENDIX | 1Q16 Earnings

17 GAAP Tax vs. Economic Tax – (Continuing Operations ) 1Q16 FY15 Pre - tax Income $204 $579 (1) GAAP tax provision includes discrete tax items of $11 million and $624 million for 1Q16 and FY15, respectively. (2) EPS based on 202.1 million and 186.4 million for 1Q16 and FY15, respectively. $ impacts are rounded. ($ Millions, except per share data) GAAP Tax Benefit (Provision) (1) ($53) $488 Net Income $152 $1,067 Reported EPS (2) $0.75 $5.72 Effective Tax Rate 26% (84%) Cash Taxes ($2) ($10) Effective Tax Rate (Cash) 1% 2% ▪ Reset of GAAP effective tax rate in 2015 due to prior year partial valuation allowance reversal ▪ 1Q16 GAAP taxes reflect a one - time discrete benefit of $13 million ▪ Excluding discrete items effective tax rate of 31% ▪ 1Q16 C ash taxes were $2 million Commentary | 1Q16 Earnings

18 Petroleum and gas (drilling, marketing, refining, and transport) 43% Rail 18% Agriculture, Food, and Ethanol 11% Cement and Building Products 6% Petrochemicals 4% Coal and Utilities 3% Chemicals (non petrochemical) 2% Steel and Metals 1% Mining 1% Other (includes off - lease) 10% Covered Hopper - Other, 31% Covered Hopper - O&G Related, 9% Tank Cars - Other, 12% Tank Cars - O&G Related, 13% Mill/Coil Gondolas, 11% Coal, 11% Boxcars, 7% Flatcars, 4% Locomotives, 0% Other, 3% Total Cars: ~117,000 Diversified North American Rail Fleet Fleet by Lessee Industry | 1Q16 Earnings Fleet by Type ▪ Diversified fleet serving a broad range of customers and industries ▪ Approximately 500 clients ▪ ~75% shippers and ~25% railroads ▪ Strong credit profile (~50% investment grade) ▪ Young, well maintained equipment ( avg. age: 12 yrs.) ▪ Utilization and lease rate trends coming off peak levels primarily driven by weakening demand for cars in the oil and gas sector ▪ Tank cars: ~15,000 leased directly to customers for the transportation of crude ▪ Sand c ars: ~10,000 supporting crude and natural gas drilling ▪ ~2,500 cars (~$150 million net investment) supporting the oil & gas industry are up for renewal in 2016 ▪ Portfolio management strategies ▪ Divert cars to alternative services (e.g. sand to cement, tank cars to ethanol and other refined products, etc.) ▪ Work with manufacturers to manage orderbook commitments ▪ Shorten lease terms while lease rates are weaker Total Net Investment:~$6.1B Commentary

19 North American Commercial Finance Business Segment Description Segment Divisions Markets and Services Commercial Banking • Commercial Finance Provides lending, leasing, and other financial and treasury management services to small and middle market businesses. • Real Estate Finance Provides senior secured commercial real estate transactions. • Business Capital Provides lending, leasing and other financial and advisory services to small and middle - market companies across select industries. Factoring, receivables management products and secured financing to retail supply chain companies . Transportation Finance • Aerospace Leasing and financing solutions for commercial airlines worldwide and business jet operators. • Rail Leasing and financing solutions to freight shippers and carriers. • Maritime Finance Financing solutions to owners and operators of oceangoing cargo vessels. Consumer & Community Banking • Other Consumer Banking Full suite of consumer deposit products and residential mortgage product offerings through OneWest retail branches and private bankers. SBA loans to meet the needs of growing businesses. • Legacy Consumer Mortgages Contains single - family residential (“SFR”) mortgages and reverse mortgages, which are covered by loss sharing agreements with the FDIC (Portfolio is in run - off). Non - Strategic Portfolios Consists of portfolios that we do not consider strategic (Canada and China Portfolios). Corporate and Other Consists of certain items not allocated to operating segments. | 1Q16 Earnings

20 Adjusted ROTCE Calculation | 1Q16 Earnings Current quarter capital amounts are preliminary. Adjusted ROTCE Calculation 1Q16 4Q15 3Q15 2Q15 1Q15 ($ in millions) A Net Income (Continuing Ops) $152 $151 $697 $115 $104 Goodwill Impairment $0 $0 $0 $0 $0 Amortization of Intangibles $6 $7 $5 $1 $1 B Tax Effected Goodwill Impairment and Amortization of Intangibles $4 $6 $4 $1 $1 Effective Tax Rate (for respective quarter) 31% 9% 24% 29% 29% C Valuation Allowance Reversal $0 $4 $647 $0 $0 A + B - CNet Income After Adjustments $156 $153 $54 $116 $105 D Annualized Net Income After Adjustments $625 $613 $215 $463 $419 Average Tangible Common Equity $9,714 $9,561 $8,991 $8,200 $8,284 Less: Average Disallowed DTA $889 $886 $604 $349 $367 E Adjusted Average TCE $8,825 $8,675 $8,387 $7,851 $7,917 D / E Adjusted ROTCE 7.08% 7.08% 2.56% 5.89% 5.26%

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